As home ownership falls, industry looks for solutions

ISTANBUL

Türkiye needs a new approach toward housing to overcome problems of prohibitively high home prices that have led to a decline in homeownership, representatives from the industry have said.

The data from the Turkish Statistical Institute (TÜİK) showed this week that homeownership declined in the country in the past decade.

The number of people living in their own dwellings fell from more than 60 percent in 2015 and before to 56.2 percent in 2022, according to the statistics authority. Homeownership was 61.1 percent in 2014.

Some 27.8 percent of the population was living in rented apartments last year, marking a slight increase from 27.2 percent in 2022.

Türkiye needs to develop a new model to produce more affordable homes, say the people from the industry.

High home prices and high interest rates are the main reasons for the decline in homeownership, says Ramadan Kumova, the president of the Association of Housing Developers and Investors (KONUTDER).

The share of mortgage-financed home sales in total residential property sales has declined from 40 percent to 13 percent over the years, even falling to around 4 to 5 percent in the final months of 2023, according to Kumova.

“We will see homeownership keep falling unless loans are offered at favorable terms.”

Kumova also blamed high prices, saying that homes are not produced for middle- and low-income groups.

“Land plot prices push up home prices. The share of land cost in home prices is around 50 percent in Türkiye, whereas it is around 15 percent in the world. Home prices will not come down unless cheaper land plots are made available,” he said.

“That’s why we need a new model for producing homes. What we propose is a public-private partnership where homes are built on public lands. This may lead to a 40 percent decline in prices.”

Homeownership is on the decline due to several factors, according to Neşecan Çekici, the chair of the Real Estate Investors Association (GYODER).

“Some people become temporary tenants due to urban transformation projects… earthquakes, migration to foreign countries are other reasons. Also, people move into other people’s homes due to economic problems,” she said.

“We need to build homes which cost less than 3 million to 4 million Turkish Liras. Normally, a family should spend one-third of its income on home loans. But it is around 65 percent now.”

She agrees that lower land plot prices will lead to lower home prices and also proposes cooperation between the public and private sectors.

Home sales plunged 17.5 percent last year compared to 2022 to 1.23 million with mortgaged home sales nosedived 37 percent to 178,000 units.