May 14 2018

Turkey limits real estate commissions, house prices slashed

Turkey will set a limit on commissions charged by real estate agents ahead of elections in less than six weeks time as constructors prepared to slash prices to sell excess stock.

The maximum rate of commission will be set at 4 percent, said Customs and Trade Minister Bülent Tüfenkci, citing draft measures the government has prepared.

Meanwhile. Turkey’s largest real estate associations will announce a discount of 20 percent on apartment prices, Yeni Şafak newspaper reported. The reductions will be announced on Tuesday with the participation of at least 40 housing builders, it said.

The measures follow a decision by the government last week to slash rates on mortgages provided by state-run Halkbank and Ziraat Bank. The rates were cut to 0.98 percent monthly, below a psychological threshold of 1 percent. Isbank, Turkey’s largest listed bank, charges 1.27 percent on home loans.

The government as announced a swathe of measures to boost the economy, including increases to pensions and an amnesty on unregistered capital, as it seeks to win snap presidential and parliamentary elections called for June 24. Some of the measures have been criticized by economists, who say they risk overheating the economy and causing a hard landing.

Turkish real estate price increases are lagging inflation of 10.9 percent after interest rates rose, cutting demand from consumers.

Unfinished or unoccupied housing has begun to litter the outskirts of Turkey’s major cities of Istanbul and Ankara. Turkish President Recep Tayyip Erdoğan has relied on the construction sector to lead economic growth and many of his business allies are very active in the industry.