Gov’t to launch another large housing project

ANKARA

The government is planning to launch another housing project and use idle offices as residential units as part of its efforts to rein in rising home prices by boosting supplies.

“We will start a new campaign in September or October at the latest, by which we expect to bring down [house] prices and rents,” Environment Urbanization and Climate Change Minister Murat Kurum said on Aug. 17.

The project will be coordinated by Emlak Konut Real Estate Investment Company, and several developers will take part in it, Kurum told reporters in Istanbul.

Kurum recalled that the government announced earlier that a massive social housing project will be launched and that following the announcement of this scheme, home prices have already started to decline.

President Recep Tayyip Erdoğan next month will unveil the details of the social housing project under which thousands of units will be built in all of Türkiye’s 81 province. The Housing Development Administration (TOKİ) will oversee what officials say will be the the largest-ever social housing project in the country.

The new campaign to be coordinated by Emlak Konut is expected to have a similar impact on prices, the minister said.

During the implementation of the new development project, the government will closely watch the prices in the housing market, Kurum said, adding that loans with low interest rates will be offered under the scheme.

Offices to turn into houses

Separately, Kurum announced on Aug. 18 that unused and oversupply of office space will be turned into residential units.

“Offices with 1.5 million square meters of area in Istanbul alone and total of 4 million square meters of area across the country, which cannot be leased out or sold, will become houses due to oversupply issues. This means creating new 50,000 houses,” Kurum wrote on Twitter, adding that the respective regulation has been published.

The residential property price index increased by 160.6 percent year-on-year in June, the Central Bank announced earlier this week.

Residential property prices advanced 9 percent in the month from May. In real terms, the index rose by 47 percent on an annual basis, the bank said.

Property prices increased 185 percent year-on-year in Istanbul and rose more than 165 percent in Ankara. In İzmir, the country’s third-largest city by population, prices soared 151 percent in June from a year ago.

House sales dropped on an annual basis for the first time in July. Restrictions on housing loans, prohibitively high prices and the Islamic Eid al-Adha holiday slowed the sales in the property market, according to experts.

Other factors also played role, they said. People think house prices already peaked and will start to come down, and they are waiting for the launch of the massive social housing project, according to experts.

People were quickly buying houses in the past months to protect their savings against the rampant inflation, which gave a strong boost to house sales. House prices are expected to decline in the months to come as demand weakens, they said.

House sales plunged 12.9 percent in July from a year ago to 93,900 units, data from the Turkish Statistical Institute (TÜİK) showed on Aug. 16.

Mortgage-financed house sales declined by 6.8 percent to 19,150, accounting for 20 percent of all sales.

In the first seven months of 2022, house sales grew 24 percent year-on-year to 820,300 units, with mortgage-finances sales rising 52 percent to some 190,000.