Roundup: Turkish homes are selling like hotcakes amid high inflation

by Burak Akinci

ANKARA, April 23 (Xinhua) — Residential property sales are soaring in Turkey as households believe buying a home is a good investment to hedge against runaway inflation, experts said.

As the inflation rate topped 60% in March, home sales during the month jumped 20.6% year-on-year to 134,170 units, the Turkish Statistical Institute said last week ( TurkStat).

The record sales came amid tighter supply and a slowdown in new investment due to sharply rising costs in the construction industry.

Real estate professionals believe that the rush for homes will continue as long as the inflation rate remains high.

“People have turned to real estate to prevent their savings from being eroded,” Cem Guler, a real estate expert in Ankara, the Turkish capital, told Xinhua.

He said that today anyone who has savings or can pay in installments for a few years is rushing to get bank loans to buy property.

“The first quarter of 2022 saw a 34% increase in property sales compared to the previous year, according to official figures…Despite high inflation, people are buying property which is considered a safe haven”, he added.

Despite rising inflation, the central bank has lowered its key rate by 500 basis points since September to 14%, at the expense of a falling Turkish lira, which has lost around 60% in value against the banknote. green since the beginning of 2021. .

Turkish President Recep Tayyip Erdogan is betting on low interest rates and cheap credit to boost the economy and growth amid currency volatility, analysts say.

Turkey’s construction sector has been a mainstay of the country’s growth over the past two decades, one of Erdogan’s successes.

But the COVID-19 pandemic and the sharp drop in the Turkish lira have hit the sector amid soaring commodity costs, said Enver Erkan, chief economist at Istanbul-based Tera Securities.

“The fall of the pound has increased construction costs, especially raw material costs, and pushed up house prices,” the expert told Xinhua.

According to the residential property price index updated by the central bank in February, annual house prices jumped 96.4% in nominal terms, while in Istanbul, the largest city and financial center of the country, they were 106.3%.

“When we look at the house sales statistics, we can conclude that the demand is still strong. It is possible to attribute this to several reasons such as the need to reside and to be considered a financial investment in accordance with the traditional real estate acquisition,” explained Erkan. .

The economist added that house prices have also fueled rental prices, especially in major cities, making life more difficult for households that have seen their purchasing power decline in recent years.

Meanwhile, foreigners are also interested in buying property in Turkey. Sales to foreigners rose 31% in March to 5,567 units, TurkStat said.

According to a TurkStat report released last week, Iranians and Iraqis topped the list with a total of more than 1,500 households, which could provide them with a Turkish passport.

Ankara adopted the citizenship scheme for homes in 2017. A year later, it reduced the minimum price from US$1 million to US$250,000 to attract foreign buyers.

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