Turkey New Build House Prices Will Burn Hand In 2021
Istanbul Builders Association (INDER) evaluated the developments in 2020 and announced the expectations of 2021.
- Istanbul Builders Association (INDER), the Istanbul property and construction market has had a difficult year, noting the decline in the number of supplies. Pointing out that new project applications have fallen by 75 per cent in the last two years,INDER said that a hike in house prices in 2021 is inevitable. 2020 assessment and expectations for 2021 are as follows:
- Disappointment: the year 2020, which we entered with high hopes, has been disappointing. The economic recession caused by the pandemic literally created an earthquake effect in the sector. Especially in ongoing projects, the effects of this earthquake are more experienced. But their main activity is construction, and INDER member companies of various sizes that put not only their hand but their body under the stone for this sector resist this earthquake, such as solid buildings that they build on solid floors.
- Achievements: the pandemic period will eventually pass, as each outbreak has passed, but it will leave a number of achievements as well as the damage it causes as it goes. If we need to list the gains of our sector, first of all, we have seen that balconies, which are considered unnecessary space in Turkish housing plans, are a source of life, and our homes can also be our place of work. After that, we will make plans in our new projects, taking into account such days. We are aware that these days oblige us to open intermediate distances in socio-cultural facilities a little, to approach nature more decisively to live healthier. But the essence of the word is that our sector will come out of this crisis by strengthening as it came out strong after the crises of 1994, 2001 and 2008 in recent years. I say this with faith on behalf of the entire industry.
- We didn't realize the real big crisis: the last 3-4 years of home sales figures have captivated us all like Ivy. Record sales of 1.4 million units in 2017. In the following years, home sales again reached a record level. - When we said We were not destroyed, we did not realize the real crisis. In the same period, that is, the number of licenses received after 2017, in other words, the size of projects implemented; each year decreased by 50 percent compared to the previous year.
- In 2017, 1.4 million m2 licenses decreased by 48% in 2018 to 667 thousand m2 and in 2019 decreased by 50% to 324 thousand M2. In two years, the number of projects licensed, that is, the amount of new projects, has decreased by about 75 percent. And we are still stuck with the number of Turkish homes sold. However, given that more than 60% of the realized Turkey house sales are used housing, we can understand that the capital transferred to the sector from the sales realized in the last 2 years is also limited.
- A record is broken, but: at the end of 2020, we are very likely to surpass the sales of about 1.4 million homes (1 million 393 thousand homes were sold in the first 11 months of 2020). Most likely, a new sales record could be set during this pandemic period. But I want to underline it again. Most of these are bank repo repossessed and used housing for sale in Turkey and our sector will again receive a limited outlook share of the capital from sales.
- Prices will rise: the sector will weaken further as there is no new project production. The added value it provides to the Turkish economy, such as employment and taxes, will decrease. On the other hand, there will be inflationary pressure on the sector in the continuation of this process. Need 1. Both 2 in hand. A decrease in supply, that is, Turkish housing production, will lead to an increase in unit prices per square meter, while hand sales continue. It is also important to note that reduced supply will increase prices.
- Either a hike or...: in the last three years, there has been less supply in the sector every day. Because all of the projects in question were done at Old costs, their prices increased very little. We did not raise, we endured, we tried to sell at Old prices, now that era has passed, because there are no old goods left, new manufacturing is formed with new figures. Before we can, we have to reflect on these hikes or leave the business.
- But we have not fully reflected the greatly increased raw material costs in the square meter prices reached to date, was said.
- Raw material problem: the cost increase, which has increased its speed in the last period of the year, shows more the gravity of this situation, which we have highlighted. While we make these sacrifices, I leave you the interpretation of the 50% increase in iron prices of iron traders on a foreign exchange basis in 6 months. At the beginning of June, the price of a ton of iron was 3,360 US dollars ($498), while the price of a ton of iron was 7,7 US dollars at the beginning of June, the price of a ton of iron was 5,780 US dollars/ton ($750)
- Unless new projects are made; both the increase in prices caused by the decrease in supply and the addition of the increase in raw material costs, house prices in Turkey will briefly burn hand. In this context, looking at such a bad picture, it will be very difficult to predict 2021. Our wish for 2021 is that our sector will strengthen again by analyzing the situation in which it is located and taking precautions.