The potential demand for homes cannot be unleashed due to the combination of several factors, including elevated residential property prices and high loan costs, according to representatives from the real estate market.
In the first 10 months of 2023, home sales plunged more than 14 percent from a year ago to around 994,000 units, with experts expecting home sales to be around 1.2 million in 2023.
Over the past three years, annual home sales averaged between 1.4 million and 1.5 million units.
Experts blame prohibitively high home prices, high interest rates, restrictions on access to loans and more attractive rates on deposit accounts, which lure people away from buying homes for the weak housing market.
The average home price in Türkiye increased by 103 percent in October from a year ago to exceed 3 million Turkish Liras ($105,000), Endeksa, which collects data on the property market,reported earlier this month.
The sale price last month averaged 23,288 liras per square meter.
Ahmet Büyükduman from İstanbul Gayrimenkul Değerleme, an appraisal company, pointed out the 60 percent decline in mortgaged homes sales, saying that it was the main reason for the drop in overall home sales.
People do not see homes as an investment anymore, said Gökhan Taş at MasterTürk Group.
“Only those who really need housing are buying one. Prices, in terms of liras, are not coming down and will not. But inflation makes them look cheaper,” he added.
The annual consumer price inflation is hovering around 60 percent.
Potential buyers in the market now have the bargaining power, according to Taş. “This situation is likely to continue well into the summer of 2024.”
More and more companies are applying for permissions for new developments, he noted.
Taş voiced optimism that sales will gather momentum when new homes from those projects are made available in the market.
Meanwhile, experts note the landscape in the real estate market has been changing.
Office occupancy rates, which plunged during the pandemic, are on the rise, while building lands and farmlands took over homes as the best-selling property.
In the first seven months of 2023, 1.6 million real estate changed hands, with home sales amounting to 675,000. Over the same period, a total of 943,000 building lands, farmlands and offices were sold.
Land sales, led by farmlands, have been picking up in the past two years, according to Büyükduman.
“During the pandemic, people’s interest in rural areas grew, while at the same time, those who cannot afford a house turned to land plots in a bid to shield themselves against inflation,” he said, warning that there is a risk of a bubble in this market.