17.03.2025 11:12
Recently, the high inflation and interest rates have led to significant increases in housing rents. Citizens who want to solve the problem at its root experience disappointment when they try to buy a home with financial assistance, only to find that mortgage interest rates do not decrease in parallel.
Those who want to own a home in Turkey are eagerly waiting for the Central Bank to lower interest rates. Similarly, contractors are closely monitoring interest rates to start new projects. However, the reduction in the Central Bank's policy interest rate initiated in December did not correspondingly reflect in housing loan interest rates.
HOUSING FINANCING RATE CONTINUES TO REMAIN LOW
Those who turn to banks to buy a house are experiencing disappointment when they see rates hovering around 3%. In this scenario, the repayment of a 1 million lira financing from the bank over a 120-month term exceeds 3 million lira. Moreover, with the monthly installment payment being around 28,000 lira, a large portion of middle-income individuals cannot act in the face of these prices. Additionally, a loan of one million lira from the bank is not sufficient to cover the financing of an average house starting at 4 million lira, especially in large cities. To own even the lowest-priced house, a down payment of at least 3 million lira and a one million lira bank loan are required. Those without this amount for a down payment cannot become homeowners either.
HOUSING PRICES CONTINUE TO RISE
In an environment of high inflation, contractors are raising prices citing labor, land, and material costs. While housing prices are rapidly increasing, the housing financing rate is not decreasing, leading to a growing housing need for middle-income individuals. In this environment, the homeownership rate continues to remain low.
THE BIGGEST VICTIMS ARE FIXED-INCOME EARNERS
The biggest victims of this situation in the housing market are fixed-income earners. Particularly, the unemployed, retirees, and minimum wage earners lead this group. While salaries remain fixed, the rapid rise in prices causes the need for housing to remain very high on one hand, while on the other hand, it results in a low homeownership acquisition rate. As housing prices rise and financing remains high, only high-income individuals can purchase homes, leaving lower and middle-income earners unable to do so.