The stagnation in property sales as a result of the increase in bank interest rates has led construction firms to apply different financing models similar to the “bill system” to spur demand. Some of the big companies offer various installment options up to 24 months with at zero interest while others offer interest rates below 1 percent and longer installment options. The firms aim to see off the stagnation period by granting attractive opportunities instead of partnering with banks. Banks, on the other hand, reflect the increase in costs as a result of the global mortgage crisis on the interest rates, and prefer to be cautious toward new loan applications.

Housing credits that are of primary importance in property sales have begun to affect the real estate sector directly. The U.S.-based global fluctuations, which resulted in a substantial increase in interest rates in Turkey, have had a negative impact on the housing sector. Scheduled construction projects have mostly been postponed while property sales have come to a halt. In such an environment of ambiguity, the financially strong companies have taken on the task of trying to revitalize demand.

Will stagnation turn into crisis?

The construction sector has gone through a rapid development period since 2004. High demand also led many firms operating in different fields to enter the real estate sector in recent years. Many international firms as well as the domestic ones began to invest more in property. The real estate sector continued with its development after getting over such crises as the 2007 general elections, the military incursion into northern Iraq and the mortgage crisis in the U.S. Now the question is will the stagnation in the real estate sector continue since the global fluctuations and the political tension in Turkey have merged?

A period of normalization

Construction firms define the current stagnation period as “normalization.” Those involved in the sector are mostly of the opinion that the development of the sector will go on especially when it is considered that housing demand in the country will exceed 5.5 million units within 10 years. The firms agree that the financially strong companies will overcome this period by producing their own payment options. The firm managers, who said that it is profitable to buy property at this time, also added that the real estate sector does not experience any hardship stemming from supply reasons in Turkey. 

Source: Hurriyet