Gelisim News

Demand for housing units of TOKI (the Housing Development Administration) may increase

The 10-year low-interest loan package of it was announced recently, a great opportunity for those who want to buy a house was arisen. Housing finance offering 3 different packages concerns both home buyers and the construction sector. Assoc. Prof. Dr. Hakan Yıldırım, faculty member at Logistics Management Department, Istanbul Gelisim University, evaluated the increasing housing prices and demands after the housing loan.

‘DEMAND INCREASES AS HOUSING PRICES INCREASES’

The "housing finance package" offering opportunities in first-hand and second-hand housing for citizens planning to buy a house has been introduced recently. While the decrease in housing loan interest rates is expected to cause an increase in housing sales, the instant increase in housing prices has worried the investors. Assoc. Prof. Dr. Hakan Yıldırım, faculty member at Logistics Management Department, Faculty of Economics, Administrative and Applied Sciences, L Istanbul Gelisim University said:

‘‘Since 2020, there have been serious price increases in housing sales. While increasing housing prices should cause a decrease in the demand for housing, the demand for housing has also been increasing despite the increase in housing prices since 2020. While it is normal for the demand for a commodity with an increasing price to fall, this positive relationship experienced in recent years is an astonishing situation.’’
The details of the Housing Finance Package are as follows;

• My First Home Housing Finance Package: Housing loan with a maturity of 10 years and an interest rate of 0.99 percent, to be applied for first-hand houses.
• Broader Housing Finance Package: Housing loan with a maturity of 10 years and an interest rate of 0.89 percent, to be applied for both first-hand houses and second-hand houses.
• Special Credit Guarantee Package for the Construction Industry: By promising to keep the housing sales prices constant for 1 year, a financing package with a maturity of 36 months which is 20 billion TL in total.

HOUSING PRICES MAY NOT BE DECREASE

Stating that using loans at a rate of 0.89 to 0.99 upon decision of the Council of Ministers provides an advantage for many investors, and the citizens who have ready money to buy a house sees buying housing more profitable, also the citizens with sufficient credibility who only have the down payment amount ready to buy a house will also tend to buy housing by borrowing, Yıldırım said:
‘‘Even if there is a decrease in the cost of borrowing due to the rapid rise in the prices of the houses which provide rental income, this does not give an indication that the rising housing prices will decrease. In addition to facilitating financing for housing loans, regulations that provide incentives and credit facilities for the construction industry should be implemented and financing costs should be improved. Only in this way, serious increases arisen in housing prices in the supply end of the housing market can be prevented.’’    

On the other hand, the construction sector has difficulties in dealing with inflation. Stating that experiencing huge increases in the prices of new houses to be built during a period of skyrocketed costs of iron, cement and many similar inputs is normal, Yıldırım emphasized that those who buy housing for investment purposes and the cost increases caused by high inflation shall cause a serious rise in both new-built and second-hand house prices.

HOUSING LED BY TOKI WILL CAUSE AN INCREASE IN HOUSING SUPPLY

Stating that 20 billion liras has been allocated for completion of the construction projects, of which 40 percent have been completed and at least 50 percent have not been sold, as of the beginning of May, Assoc. Prof. Dr. Hakan Yıldırım pointed out that increasing construction of cheaper housing with more suitable maturities under the leadership of TOKI will cause an increase in the housing supply, and thus a barrier will be set for price increases.
 

Created Date: :   Friday, May 13, 2022