A significant drop in house sales last month could foreshadow an even worse period for Turkey’s housing markets, where prices remain still high despite falling demand, market experts argued on Monday.
Sales of new houses fell for the sixth straight month in July, the Turkish Statistics Institute (TurkStat) announced on Monday. In July, the number of houses sold was down by 20.2 percent compared to the same period of the previous year, with 85,101 home sales recorded. In the same period, mortgage house sales also dropped by 32.9 percent year-on-year. In the first seven months of 2014, 9.7 percent fewer houses were sold when compared to the January-July period a year ago, Monday’s data revealed.
July’s drop in house sales is a remarkable one, pundits argue, adding that upcoming months could see even sharper declines in sales.
“It is not hard to predict further declines in house sales through the end of this year amid increased debts, low demand and high prices. … The housing markets face bigger risks,” Yeliz Karabulut from securities company ALB Menkul Değerler told Today’s Zaman. She recalls that the Turkish construction companies had TL 95 billion ($43.6 billion) in unpaid debts in June, adding that this was an astounding 61 percent rise over the end of 2012, when the figure was TL 59 billion.
Housing prices in Turkey’s largest city shot up 21.59 percent last month compared to July 2013, a figure that was 10.79 percent on average for the entire country.
Cemal Gökçe, president of the İstanbul branch of the Chamber of Civil Engineers (İMO), told Today’s Zaman that housing sales would drop more than 20 percent during the last five months of this year. “The current picture reveals serious structural problems in the Turkish housing industry. Builders have recently intensified their focus on developing apartments, especially for the middle and upper classes… there are not enough affordable units for the lower class,” Gökçe said. He also referred to the growing risk of a housing bubble in Turkey markets. “The number of housing units on sale has exceeded the 1 million mark in Turkey; prices are high and this is not a sustainable situation.”
The drop in sales coincides with the Muslim fasting month of Ramadan and just ahead of the nation’s presidential elections, two factors that some observers have argued might have led to a stagnation in the housing markets. Amid political uncertainty, housing sales had already been steadily dropping in Turkey since the beginning of this year.
Meanwhile, İstanbul saw the highest number of sales — 17,116 — comprising 11.1 percent of total sales in July. Ankara followed with 9,426 (6.2 percent) and İzmir was next with 5,281 (6.2 percent). The provinces with the lowest sales were Hakkari, Ardahan and Şırnak with six, nine and 17 home sales, respectively.
In July, foreign buyers purchased 32 percent more houses year-on-year in Turkey, with 1,473 units. Antalya, İstanbul and Aydın saw the highest sales of houses to foreign customers respectively. The increase in house sales to foreigners was even higher in the first seven months, registering a 57 percent year-on-year surge with 9,980 units.