Woes of housing market far from over, report shows

ISTANBUL

The Turkish housing market woes are far from over as many developers expect more headwinds for the industry in the coming months, claims a survey conducted by the Association of Housing Developers and Investors (KONUTDER).

The decline in homes sales, which went on for much of 2023, continued in January, official data showed earlier this month.

Only 80,300 residential properties were sold across the country last month, down from 139,000 units in the previous month and marking a 17.8 percent decline from a year ago.

In 2023, housing sales plunged more than 17 percent compared to the previous year to 1.23 million units.

The survey by KONUTDER shows that 73 percent of developers expect firsthand homes sales to decline in the next 6 months, while only 14 percent voiced optimism that sales will increase over the same period.

Nearly 60 percent of the companies surveyed think home sales to foreigners will continue to decline in the next 6 months.

Foreign nationals bought just over 2,000 homes in Türkiye last month, translating to a steep 51 percent fall from January 2023. In the whole of 2023, residential property sales to foreigners nosedived 48 percent to 35,000, according to the numbers from the Turkish Statistical Institute (TÜİK).

There was an improvement in expectations of home prices, however. Some 55 percent companies which participated in the survey, said that they expect home prices to increase in the next 6 months, whereas it was 73 percent in the previous survey.

Home prices soared 73 percent in January compared with the same month of last year, Endeksa, which collects data on the housing market, reported earlier this month. The average home price in Türkiye climbed to 3.14 million Turkish Liras ($101,100).

In Istanbul, the average home price was 4.24 million liras, up 65 percent year-on-year, while residential property prices in the capital Ankara soared 87 percent to 2.6 million liras, according to the data from Endeksa.

None of the companies anticipate a decline in rental prices, but the portion of the participants who expect rents to increase in the next 6 months, declined to some 50 percent.

Developers, on the other hand, do not appear to be optimistic about home supply in the months to come. As high as 72 percent of the companies expect home production to decline in the next 6 months.

Almost all members of the association agree that costs in the housing market, including labor and materials used in construction, will continue to climb.

Last year, the headline construction cost index surged 67.3 percent, with labor costs in the sector rising nearly 112 percent and materials cost up 54 percent.