The level reached by housing prices in the primary and secondary markets is slowing down housing demand

Real estate sector representatives, stating that the decline in housing sales continues, note that the real decline in prices has also persisted for 10 months. Experts, noting that the nominal increase continues despite losing momentum, say, "The nominal price increase has fallen from 180% to 89%, but it is still at a level we are not accustomed to."

The level reached by housing prices in the primary and secondary markets is slowing down housing demand. While the Housing Price Index calculated by the CBRT for September 2023 increased by 4.3 percent compared to the previous month, it showed a nominal increase of 89.2 percent and a real increase of 17.8 percent compared to the same month of the previous year. Despite the widespread belief among the public that housing prices are high, consumers are ensuring that sales occur at an average of 100 thousand per month, both out of necessity and to protect the value of their money.

Sector representatives commented on the level of housing prices to EKONOMİ. Hakan Akdoğan, Chairman of the ITO Real Estate Committee, said, "When we look at the sales figures announced by TUIK for October, we see that approximately 94 thousand houses were sold. This figure shows that the decline in real estate sales continues. However, this decline is not seriously reflected in prices. There is only a dissolution or pullback in the prices of incorrectly priced or overpriced houses. There is no decline in the prices of houses entered into the market in accordance with market conditions. A bargaining margin has re-emerged in the market. While property owners have not bargained at all for 2-3 years, buyers can now bargain with sellers. This margin can rise up to 5-10 percent depending on the type and price of the real estate. In addition, the time a house stays on the market, that is, the time it takes to sell, has lengthened. While our average was 40-50 days before, this average has now risen to approximately 80-90 days. It seems that while correctly priced houses are sold, incorrectly priced or overpriced houses will not be sold and their time on the market will be quite long."

"THE CLOSURE OF CREDIT CHANNELS WILL SLOW DOWN THE RATE OF PRICE INCREASE"

Celal Erdoğdu, Responsible Valuation Specialist and Managing Partner at Istanbul Real Estate Valuation, said, "The real decline in housing prices has been continuing for 10 months, but the nominal increase also continues. The annual nominal price increase has fallen from 180 percent to 89 percent, but this rate of increase is still above the rates we are accustomed to. One of the reasons for this is consumer price inflation, and the other is the demand for housing that exceeded the norm in the May 2020-November 2022 period. It seems that we will have to wait until June 2024 to approach long-term averages in nominal and real housing price changes. The closure of credit channels and practices aimed at keeping housing prices under control will help slow down the rate of housing price increases. We saw negative levels in real housing price increases in April 2017, and this process lasted for 2.5 years. If we experience negative real increases again, this time, with the right policies, we may see not that an opportunity has been created in the housing market, but that housing has become easily accessible again. Currently, we need to pay 21 years of minimum wage to access an average house in Turkey; this ratio had fallen to 10 years during the period when housing prices had negative real changes."

"PRICES WILL NOT DECLINE IN THE MEDIUM AND LONG TERM"

İsmail Özcan, President of the Real Estate Marketing and Sales Professionals Association (GAPAS), said, "On one hand, the tightening of housing loan opportunities, and on the other, the rapid increases in costs, seem to be the two biggest obstacles in front of real estate developers starting new projects. These two indicators point to the fact that even if new projects are started, housing prices will not decline much in the medium and long term. When looking at the short term, when comparing the sales prices foreseen for new/zero houses in projects under construction or planned to be started with the small number of houses waiting to be sold in projects that have already been completed or are 1-2 years old and have not seen any sales, it is seen that real estate developers will not be able to reach their targeted sales prices for a certain period. The prices of houses waiting to be sold appear to be 10-15 percent below the prices of those in projects under construction. When examining the primary/secondary market, it can be said that the difference between the prices of houses waiting to be sold from the project and the houses in the second-hand market similarly hovers in the 20-25 percent band. As the Housing Price Index announced by the CBRT also reveals, considering that high inflation will continue in the short term, we predict that housing prices will rise well above the announced rate."

"LOANS ARE VIRTUALLY NON-EXISTENT"

Ferhat Keten, Managing Partner of Keten Group, said, "We observe that the square meter price in housing is 20-25 percent lower than 6 months ago. While activity in the upper segment continues, the lower and middle segments have stopped. In a market where loans are virtually non-existent, goods are sold only with cash or company maturity. Difficult days await contractors who have started projects or have stock and debt in the medium term. There will be exchange rate risk after the election; there is an expectation of a devaluation of 20 percent and above in the market. This will also trigger inflation again. For a period, goods were sold so that money would not melt away, but that period has passed."

News Source: 12punto