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Revised November, 2024 – Resource, Turkey iResidence
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EXPERTS: THE TURKISH REAL ESTATE SECTOR IS ON FIRE
Price of houses and apartments for rent in Turkey and sale have reached extreme figures, and the general expectation of the Turkish citizen after the housing crisis in Turkey is that prices will normalize. So how will this be possible when the houses for sale, even in earthquake-hazardous buildings, have exceeded million TL?
iResidence, “The first factor is on 20 December 2021 the dollar exchange rate from 8.5 TL jumped to 18.5 TL due to Erdogan government interference with Turkish central bank and clash to pull down loan interest rates from 19% to 14% yearly. The houses on sale for 1 million TL became 1.6 million TL by Turkish homesellers. After 1 week the usd exchange rate went down to 13.5 TL but homeseller prices haven’t come down. Foreigner homebuyers are also optimistic now on what to do,” was said.
Getting started: A basic right of a Turkish citizen is to access to housing. However, recently, the level of both rent and house prices for sale has made it almost impossible for citizens to access this basic right. Buying a house for a large audience in Turkey, is becoming a dream that is getting a little more distant every day.
And how long will this situation last? Will prices stabilize or will they continue to rise? What is the rationale for the increase in housing prices? What should be done to ensure and facilitate access to buying housing in Turkey for residence and citizenship, and what steps should be taken?
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WHY ARE TURKEY HOUSE PRICES RISING?
Let’s first look at why house prices have seriously increased over the past year.
The two main reasons for the hikes are explained by the fact that the basic construction materials and all other inputs are indexed to the dollar and the lack of housing supply.
It is stated that 750-800 thousand houses are needed in Turkey every year, but such a number of houses have not been released to the market in the last year, and the ongoing problems of supply are reflected in prices.
Another important factor affecting prices is that costs increased by 48.8 percent according to TURKSTAT (as of November 2021) and by more than 100 percent according to industry representatives. Even serious increases in costs went so far as thousands of contractors across the country, who wanted to protest against cement prices during the year, stopped construction. construction projects carried out by 120 thousand IMKON members in 40 provinces stopped for 15 days.
Not only industry representatives, but also consumer associations have radically underlined that the solution is to stop this increase in costs and give confidence to the markets.
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EMPHASIS ON ‘A MEASURE THAT WILL ENSURE STABILITY IN THE COST
President of the Istanbul Association of Builders (INDER), emphasizes that the state should step in to ensure that citizens have access to housing.
“When the economic management introduces economic measures that will ensure stability in costs that cause an increase in prices, it remains only to equalize supply and demand,” said, who said that price stability in materials used in construction construction should be ensured and the overall cost of construction should be fixed at the optimum level.
”The only way to meet the housing demand is to expand the supply so that prices are at an accessible level, that is, new projects are activated urgently,“ said. ”The most important step to be taken for this is to ensure the land, which is the main input of construction, at an affordable cost,” he said.
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MARKETS SHOULD BE GIVEN CONFIDENCE
Honorary President of the Consumer Application Center, also emphasizes that in order for prices to reach reasonable levels, the balance of supply and demand, which is the basic rule of the economy, should be established first.
Emphasizing that confidence in the markets and confidence from the political environment should be given for this, said, “If the supply and demand balance can be established in a fully competitive environment, prices will reach the point where they should be spontaneously. There is no full competition, this time they can agree among themselves and make the same price increases,” he said.
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TAXES SHOULD COME TO AN ACCEPTABLE LEVEL
iResidence emphasized that the taxes levied on the purchase and sale of housing are high, which pushes the citizen to act illegally and affects the real value of the house.
A total of 4 percent tax is levied on each house sale from both sides, which will be 2 percent-2 percent which is the Turkish government buy-and-sell tax rate.
iResidence, who said that this rate is high, said: “Those who buy a house for 1 million TL + 40 thousand TL also do not want to pay taxes. This affects the real value of the house. I think it will be more useful to specify the actual value if it is in the form of 1 percent- 1 percent. If taxes become acceptable, everything will be more transparent. The state directs its citizens to act illegally with the current tax system,” was said.
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THEY SHOULD BE EXPOSED AND GO TO JAIL
Recently, problems such as the withdrawal of ads for sale had been encountered because it was unable to price after the exchange rate increases.
iResidence stated that those who stopped selling their house with the idea that ’prices will increase even more’ and created consumer victimization are not ordinary citizens who own a house, but business professionals, these people should be disclosed and a heavy sanction should be applied.
240 of Turkish Criminal Code. providing information that the article is about those who refrain from selling a particular good or service, said, “The paragraph that the penalty cannot be converted into money and postponed should be added to this article. Those who do this should go to jail for even two months. Because we are talking about an act against the public. Those who do this should be exposed and receive the necessary punishment,” was said.
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THE STATE SHOULD PRODUCE HOUSING FOR MIDDLE- AND LOW-INCOME PEOPLE
Real Estate Valuation General Manager emphasized that the state should build and sell housing for middle- and low-income citizens.
He said that affordable housing should be built and sold at reasonable levels for people who really need it, and made the following recommendations:
“Instead of urban transformation, the transformation of owners should be supported, credit opportunities should be strengthened in the transformation. In cities in need of housing, the land in the hands of the state should be quickly opened for development and put on the market. Unfortunately, we had to do all of this yesterday, we are late today, it will be even later tomorrow.”
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SLUMMING IS AN HEIRLOOM FROM THOSE DAYS
Otherwise, there are significant risks of direct intervention in prices, said that free market conditions should not be interfered with:
“Prices can’t be called a stop, it brings with it very, very big risks. During the second world war, this experiment in our country caused irreparable damage and was very difficult to return. The logic of slumming today is an heirloom to us from those days.
When we examine the experiment, we learn that price restrictions and the cessation of the free market block production, and when production is blocked, the entire construction and related business sector, including the manufacturing wheel, stops,” said, “You also make the need for housing unmet. You are fundamentally disrupting the dynamics of the construction industry. Free market conditions should definitely not be touched.”
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CPI CAN ALSO BE DECISIVE FOR HOMES FOR SALE
President of the Consumer Protection Association said, “The right to housing is a fundamental human right. The individual’s need to reach a residence worthy of human dignity should be met easily, continuously, sustainably and safely. It is the state that will also ensure this,” he says.
Recalling that the consumer price index (CPI) is decisive in the increase in rental prices, suggested that “A similar practice can also be considered in housing prices for sale” and stated that exorbitant hikes that vary from region to region can be avoided.
”The state should take the necessary measures with a planning based on the historical and cultural characteristics of cities and settlements, environmental values,“ he said, “There is a legal regulation on exorbitant price increases. It can be considered that housing with an exorbitant increase should also be considered within the framework of this regulation. He said that precedent price application and fair prices can be taken into account in housing sales.
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IT SHOULD BE USED FOR THE PUBLIC, NOT FOR RENT
iResidence, the factors that determine the price of property in Turkey ‘the location, land value, construction costs, and cost a lot of money that gave the information.
Emphasizing the importance of land costs for decaying prices, iResidence said, “Idle places can be used for rent and not for the public to provide convenience in land costs”.
Noting that the increase in construction costs cannot be prevented because these foreign-dependent materials are re-raised after each decrease in TL, iResidence suggested that “incentives can be given for the development of an industry in which we can produce these materials domestically and for the production of these inputs here”.
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HOUSING ACQUISITION CAN BE FACILITATED WITH INCENTIVES
Turkey Real Estate Appraiser, on the other hand, informed that government intervention throughout the world is mostly in the form of supporting housing with steps taken in the direction of incentives.
”By expanding the incentives available in our country, housing acquisition can be facilitated,“ said ”The first of these is that it can be facilitated for families and individuals who do not yet have housing to acquire housing in Turkey,” he said.
”The next step will be to control the increase in current demand,” said, continuing:
“For example, to ensure that those with more than one residence prefer other investment vehicles rather than housing investment, and different tax models that will be introduced for those with more than one residence can control demand. It is necessary to think about when making individuals who need a home a home owner, it will be possible to direct individuals who have the opportunity to buy a home in Turkey to different investment vehicles.”
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