Turkey on the edge of housing crisis amid political turmoil
The impact of the recent global financial crisis is becoming more visible in Turkey, and the situation is beginning to leave its mark on the housing sector. Speaking to the Anatolia news agency Turkish Contractors Association (TMB) Chairman Erdal Eren pointed out that contractors are being forced to draw in customers by offering loan rates that are more attractive than bank offers.
Noting that Turkey has not yet begun in reality to suffer from the ongoing global financial crisis but saying that hesitance among economic actors is becoming more noticeable, Eren explained: "The impact of the financial and political crises is becoming more visible.
The financial crises led the banks to restrict their loan offers. Subsequently, investors and ordinary buyers no longer purchase houses. This will cause stagnation and panic in the construction industry. Our colleagues produced a large number of houses, believing the trends would remain strong and alive. But real estate purchases have slowed down. They now have a number of houses on their hands, and the housing industry will suffer from this.”
He added: “They are trying to resist. Some of them will suffer dire consequences because of this. They will have to sell the houses in their stock at lower prices. I’m afraid some of them will go bankrupt because of the negative impact on cash flow.”
Stressing that they do not expect significant growth in the construction industry, Eren noted that the sector may be revived if the Transportation Ministry implements some of its build-operate-transfer (BOT) projects this year.
İstanbul Chamber of Real Estate Brokers Chairman Sabri Atet said the closure case against the ruling Justice and Development Party (AK Party), in addition to turmoil in the global financial markets, has squeezed the credit markets. He said there had been a 50 percent decrease in housing sales after the recent developments and added that construction firms were continuing to build but that they cannot sell the properties.
Ateş also said housing sales would be worse in 2009, as it is expected that home loan rates will go up further.
Real estate brokerage firm Retürk General Manager Murat Gener said there was stagnancy in the market. He said it would be advantageous for those who have enough cash funds, as house prices are declining significantly. However, he did not recommend buying a new house with bank loans at the present time.