Turkiye: Prices in automotive and real estate may fall once again

President Erdogan’s warning after the Cabinet Meeting that severe sanctions will be imposed on exorbitant price increases in automotive and real estate is very important. Industry representatives are of the opinion that if the measures to be taken and the horizontal movement of the exchange rate continues, prices may loosen in both areas, and thus positive results may be obtained…

In some sectors where price increases have occurred in recent years, questions such as ‘how much is artificial, how much is real and how much is intentional?’ are frequently asked. Prices, which were changing almost every day for a while, especially on market shelves, seem to be on track for now with the steps taken in that area.

The other two sectors that users complain about the most are undoubtedly real estate and automotive. The increase in prices in both areas in a very short time and the emergence of opportunists in this field have pushed the government to take different measures.

In his statement following the Cabinet Meeting, President Recep Tayyip Erdogan also announced the measures to be taken against price increases in the automotive and real estate sectors.

Stating that they will impose heavy sanctions on individuals and institutions that disrupt the balance of the market in the housing and rental sector and cause exorbitant price increases, Erdogan announced that the unbalanced price increases in the cement and ready-mixed concrete sector are being closely monitored.

Cement ton price was increased by 1,500%

Tahir Tellioglu, President of the Construction Contractors Confederation, shares some critical figures before evaluating the possible effects of Erdogan’s statements on the sector.

He reminds that the cement ton price was ₺150 in March-April 2021, and says that this figure increased to ₺400 in the summer months of the same year. Tellioglu points out that the exorbitant increase is not limited to this and explains that the ton price of concrete increased to ₺600 by the end of 2021 and to ₺1,300 by the end of 2022.

“Nowadays, the average cement ton price has reached up to ₺2 thousand 300. Cement producers’ costs increased by around 700-800%. “However, there is a 1,500% increase,” he says and underlines that this is unrealistic.

The increase in cement also affects other sectors

Tellioglu points out that this unfair price in cement prices affects many sectors… Products such as concrete, mortar plaster production, floor screed coverings, wall materials, ready-mixed concrete, construction chemicals, tiles are the first things that come to mind…

He points out that if the current situation is not intervened, the adequate housing supply will decrease, which will mean that both sales and rental prices will increase.

Even keeping prices constant has a discount effect

Tahir Tellioglu says that President Erdogan’s statements are very valuable for the sector and explains his expectations in the near future:

“Of course, it will have a positive impact on the industry in terms of price. However, we should not forget this. Inflation remains high in our country. Even the fact that prices do not increase within a period of 6 months actually creates a discount effect.

It would not be right to consider it only in terms of discounts. Our President’s emphasis on cement and ready-mixed concrete is also very critical for projects such as urban transformation or on-site transformation. The stabilization of prices in cement and ready-mixed concrete will have a positive impact on these projects. Naturally, those projects will accelerate and the supply will increase. As the supply increases, prices will also be shaped accordingly. However, the key here is that the market remains stable. “If we can achieve this, we can speak more positively about the future.”

If the exchange rate does not rise suddenly, there will be a reduction in automotive prices

President Erdogan’s statements included not only the real estate sector but also the automotive sector. There have already been steps, restrictions and some new regulations regarding the automotive industry. Recently, many automobile companies have organized new campaigns for new vehicles, and the sector has stepped up again.

Automotive Expert Erol Sahin points out that the ‘selling out’ period that has dominated the market for the last year has come to an end. He reminds us that in recent years, people have been buying vehicles to ‘make money in the short term’ or ‘as an investment’ rather than out of necessity.

Following the measures taken by the government and the situation in foreign currency, things have changed… Sahin summarizes this process by saying, “There is no environment where you can sell more expensively than you bought.”

Pay attention to November 1 in automotive

Erol Sahin points out that the 6 months and 6 thousand kilometers rule in the automotive sector and the move that second-hand vehicles cannot be sold at a price higher than the new price are the steps that are recovering the sector.

However, he emphasizes that one of the real big changes is the new application that will come into force on November 1 and continues:

“There are restrictions on the number of advertisements for both citizens and legal entities. When you post a for sale ad, your identity information will definitely be on the other side. You also need to be in a position to sell that vehicle. In other words, the vehicle will either be yours or the owner of that vehicle will be your first degree relative. This change will come into force on November 1 and we will see its reflections. Fake posts on ad sites will also be prevented and a more orderly picture will emerge.”

Will automobile prices decrease?

Erol Sahin was asked the question that everyone is wondering: “Will the prices of new or second-hand cars decrease?”

He says that the stable movement of exchange rates is one of the most important factors for this situation. He shares the opinion that if the exchange rate does not rise suddenly, prices will decrease slightly due to the campaigns that will continue until the end of the year.

Source: Trthaber / Prepared by Irem Yildiz

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