SALES RATES FALL: TIME TO INVEST IN HOUSING

The first quarter of 2021 recorded almost the lowest housing sales rates in the last five years

Two quarters have been identified when the lowest rates of residential property sales over the past five years have been recorded. This was reported by Makbule Yönel Maya, General Manager of TSKB Real Estate Appraisal (Türkiye Sınai Kalkınma Bankası - Industrial Development Bank of Turkey. - Ed.)

One of the two periods mentioned is the first quarter of 2021.

As the portal Emlakgundemi clarifies, the lowest rate happened in the first quarter of 2019, when 256 433 housing units were sold. The beginning of this year is the second lowest among all quarters over the past five years: 263 007 units.

We have already mentioned the reasons: the rise in construction cost coupled with the pandemic effect, epidemiological restrictions and inflation, as well as the washing out of vacant houses and apartments from the market (in the sense that they are being bought up, and the range is gradually decreasing, since fewer objects are being built in the last year than before the pandemic).

For comparison: in other quarters of the aforementioned five-year period, sales volumes exceeded 300 000 transactions in a three-month period.

However, the pandemic is gradually passing, and despite the ongoing episodic lockdowns, construction market is turning back to normal. And just now, experts recommend making decision on a deal - to those who want to save money in the long term: since the same good moment for buying, when the market in some sense is hiding and waiting, the next time will be till the cows come home. Everything leads to the fact that sales will now accelerate. At the same time, Turkish real estate is growing steadily in price, the fastest in the world.

In addition, right now it is possible to agree with the bank on a moderate interest rate on a mortgage lending, which is not difficult for foreigners to obtain. Especially in light of the sharp drop in the number of submitted (and approved) mortgage applications in the current quarter: their number is almost three times lower than in the first three months of 2020. And financial institutions benefit from new customers, so they are more willing to meet halfway.

We compare indicators of the first quarters of the last five years including the current one in Table1:

Table 1

As you can see from the data presented, in 2017, 2018 and 2020, in the first three months, housing sales volume exceeded 300 thousand transactions, and much more. And now, according to the TSKB speaker, one should expect a quick normalization of sales rates.

Important indicators for both the market and a potential investor are received building permits, that is, licensed houses (having all the necessary documents; unfortunately, in Turkey there is also a certain percentage of illegal buildings, which sooner or later are identified and demolished).

Makbule Yönel Maya draws attention to the fact that decline in the number of licensed apartments in free sale, as well as decrease in their average area, began in the first quarter of 2018. And since 2021, the number of detected problem residential real estate objects: apartments and houses began to decline with the strengthening of control measures.

“Another important indicator from the point of view of housing statistics is the share of primary housing,” the expert explains. “The downward trend in the number of first-time sold real estate units has significantly increased over the past two years noted back in the first quarter of 2019”.

Summary: high-quality real estate from the developer, which has all the necessary documents and is located in buildings that are competently constructed in compliance with all standards, are bought up in the first place and pretty quickly. It is not because interest in newly built housing is falling; it is just that the choice is reducing as we can see in Table 2:

Table 2

TOP CITIES IN HOUSING SALES IN THE FIRST QUARTER OF 2021

In January-March this year, most of the residential real estate was sold in Istanbul. By the way, foreigners also prefer to invest in housing in this city.

Also, the top ten provinces with the largest number of transactions included (in decreasing order, after Istanbul): Ankara, Izmir, Antalya, Bursa, Mersin, Gaziantep, Konya, Tekirdağ and Kocaeli.

Antalya is an invariable leader among seaside regions recognized as the resort capital. Alanya preferred by many foreigners is also located in this province, as well as such popular resorts as Kemer, Side and Belek. By the way, every fifth housing purchased by foreigners is located in Antalya.

As for price increase, real estate is growing in price the fastest in Muğla, Aydın and Antalya.

TABLE 3: STATISTICS FOR THE LAST 6 YEARS

Housing price index (an indicator that reflects the monthly change in the average house price. This indicator is the main inflation index in the housing market. - Ed.), which shows a trend of rapid growth since May 2020, has increased growth since October last year when the decline in sales was recorded.

“It would be correct to say that this situation is closely related to the fact that the price index is largely responsive to the residential real estate sales volume. This was especially noticeable earlier- in the period from September 2017 to January 2020, when inflation did not affect price increase for residential real estate so much, the expert believes. “As for the housing price index, we are now seeing an annual nominal increase of about 30% judging by the recently published statistics for 2020 and January 2021.”

Since January 2020, the index began to correlate with inflation, and housing prices increase, which had been somewhat restrained earlier for one or another objective economic reason, intensified in the summer of 2020. Well, the increase in construction costs and the associated difficulties that have arisen in connection with this, which developers are faced with in the construction of new housing have led, as a result, to a noticeable increase in the cost of residential property especially in the last 6 months.

So now is just the moment when it is time to ride the wave in order to take advantage of some lull and forced pauses in the development market (due to the pandemic, lockdowns and some other objective factors), to have time to look after and buy out housing for investment purposes. This will allow you to fix the price that does not depend on inflation, and thus start earning even at the transaction registration stage for property transfer into your hands.

This, in particular, has already been used by almost a thousand Russians in January-March 2021 alone: ​​938 real estate transactions concluded with Russian citizens were recorded in Turkey in the first quarter.

Well, read about resort regions promising for investment in another our article.