The real estate market in Turkey continues to hit bottom lows as economic hardships in the eastern European country continue to soar.
Mortgage sales have now declined by 79% as Turkey’s currency, Lira, slumps against major currencies, especially the US dollar.
The toing and froing of political parties, as the elections campaign has resumed, is also not helping economically. The other major factor has been the stand-off between Turkey and the US, largely caused by the ongoing Syria war.
The construction sector is among many in Turkey that have hit rock bottom as they experience slow growth. Now, economically-stricken Turks are highly cautious when investing in properties.
Uncertainty and vulnerability are estimated to rise in the sector. Houses sold through mortgages decreased by 79% in Turkey, compared to the same month of December of 2017. A total of 7148 residences were sold, according to the Turkish Statistical Institute (TUİK) figures as of December 31. The sales by mortgage occurred as 5.2% in total sales. İstanbul ranked first with 20.4 percent, the other means 1 461 residences were sold in İstanbul in December 2018.
Dramatic drops in mortgage sales
Besides the sales realised by mortgage, total residence sales dropped by 2.4% in 2018. According to figures provided by TÜİK, around 1.375.398 residences were sold across Turkey in 2018 while the total sales increased by 2.8 % in December when compared to December 2017. Meanwhile, the residence sales to foreigners increased by 2.9%.
In the same figures of TÜİK, it’s seen that around 136 845 residences were sold in December, around 2.9% increase was observed when compared to the same month December 2017 while a dramatic fall, which occurred around 79 % was observed in mortgage sales by December 21, 2018, when compared same month of 2017.
The main reason for the decline is the high credit interest rates in Turkey which also triggered by the increasing foreign exchange rates. Coupling with the economic shrink, the crisis-stricken Turks sharply drew back their interest to the residence sales by the mortgage.
Turkey’s construction sector, the backbone of Ankara’s growth policies for the past decade and a half, stands out among the earliest victims of the country’s economic crisis, rapidly contracting and threatening to drag others down with it.
Construction sector shrinks
On the other hand, the Turkish Statistical Institute has announced that the economy of Turkey has grown by 1.6 percent in the third quarter of 2018. In the same period last year, the economic growth rate of the country was announced as 11.1% by the institute.
According to the latest figures announced by the institute have also shown that in the third quarter of 2018, while the total value added by the agricultural sector has increased by 1 percent and that of the industrial sector has increased by 0.3 % in comparison with the same period last year, the value added by the construction sector has decreased by 5.3 %.
According to the institute, in the third quarter of this year, the final consumption expenditures of the state have also increased by 7.5% when compared to the figures of last year
Construction projects are not complete
From far away, the Burj Al Babas could be confused as miniature villas. The homes all look the same, their blue-grey steeples and Gothic fixtures calling to mind the castles in Disney films.
When the project first began in 2014, its developer, the Sarot Group, hoped the luxury aesthetic would appeal to wealthy foreign buyers. Now its homes sit empty at the base of Turkey’s north-western mountains.
Meanwhile, many construction projects were suspended due to the increasing prices. Many abandoned housing projects like miniatures villas are still waiting to be finished.