Lower interest rates expected to trigger new housing projects
ISTANBUL
Developers are waiting to see and analyze the direction loan rates will take in 2025 before launching new projects in the housing market, which has experienced a plunge in sales for months.
Currently, both consumer and construction companies are in the wait-and-see mode in an environment of high inflation and high interest rates.
Companies are holding back the projects for which they have already obtained necessary permissions from authorities because they are uncertain whether it is the right time to start construction, given the current weak market demand.
The interest rates on home loans have been on the rise since the Central Bank started to increase its key policy rate in June last year.
Developers will wait until next year to launch new housing projects if the rates start to come down, according to experts.
Home sales were down 5.2 percent year-on-year to around 73,000 in June, which followed a 2.4 percent decline recorded in May.
Mortgaged home sales plunged more than 49 percent annually last month.
Meanwhile, experts noted that the growth in construction costs outpaced the increase in home prices.
“Due to weak demand, some companies do not raise home prices as much as the increase in their costs,” they said.
This may change in the long run, according to Ahmet Büyükduman from Istanbul Gayrimenkul Değerleme. “Eventually, both prices and costs will move in the same direction,” he said.
Homeowners, who are out in the market to sell their properties, are offering discounts of up to 20 percent, said Hakan Aydoğan, the chair of the Real Estate Committee at the Istanbul Chamber of Commerce.
Aydoğan agreed that when deposit rates and interest rates on home loans start to decline “the picture will change.”
When demand recovers, prices will inevitably go up, Aydoğan said.
