Turkey has two years of unsold housing stock after crisis

Turkish construction companies will likely take two years to sell their stock of unsold homes after a slump in the housing market, according to Feyzullah Yetgin, head of a top industry body.

It will take a year to sell excess amounts of finished homes and a further year to offload construction projects that have yet to be completed, Yetgin said, according to Hürriyet newspaper.

Interest rates on loans need to come down in order for consumers to become more interested in buying homes, said Yetgin, who leads the Real Estate and Real Estate Investment Trusts Association (GYODER).  Interest returns from bank deposits are currently an attractive alternative and it will take time for the situation to change, he said.

“Delayed property price increases will be made when the market enlivens and interest rates have fallen,” Yetgin said. “Therefore, it’s an advantageous market for buyers right now.”

Turkey’s housing market is in the doldrums after a currency crisis last year led to a surge in interest rates and inflation. Turkish President Recep Tayyip Erdoğan’s government is calling on the central bank and the nation’s lenders to help spur economic growth by lowering interest costs. Erdoğan sacked the governor of the central bank last weekend after he failed to lower rates.

Turkey also needs to be more structured in the way it zones areas for housing and in how it grants licenses for construction in order to put the industry on a firmer footing, Yetgin said, according to Hürriyet.

A plan to offload housing stock into special funds, which will be securitised for purchase by local and foreign investors, will bear fruition by the end of the year, according to Gürsel Öngören, deputy head of GYODER, Hürriyet reported.