Lower rates expected to give boost to home sales
Home sales are expected to receive a boost following state-lenders’ decision to slash interest rates, according to representatives from the sector.
After the Central Bank’s decision last week to reduce the key policy rate by 200 basis points, three state-owned lenders, namely Ziraat Bank, Halkbank and Vakıfbank, this week cut interest rates on loans, including housing loans.
Interest rates for housing loans will be 1.29 percent for homes worth up to 1 million Turkish Liras ($102,500) and 1.34 percent for homes worth more than 1 million liras, the three banks said in a joint statement Oct. 25.
“Consumers are very responsive to interest rates. Those who had been expecting a rate cut will not act to buy homes,” said Altan Elmas, the head of the Housing Developers and Investors’ Association (KONUTDER).
Elmas expects people, who had parked their money in foreign currency saving accounts or in gold, to shift their demand toward properties.
Besides the state-lenders’ rate cut, developers are also likely to offer other incentives, which may encourage people to buy homes, Elmas said.
Initially, second-hand home sales will get a boost from the rate reduction, according to Nazmi Durbakayım, the chair of the Istanbul Contractors Association (İNDER).
“People will sell foreign currencies as they see opportunity for profit taking and on top of that there are loans the banks are providing with low interest rates…thus, demand for homes will pick up. But special offers might be needed, particularly targeting to boost the first-hand home sales,” he added, noting that last year state-owned banks last year launched such schemes.
Durbakayım also called on private banks to join the state-owned lenders in lowering interest rates on loans.
In response to complaints from potential homebuyers that companies hike property prices in the face of strong demand and lowered rates, Durbakayım said that well-established firms are not likely to increase prices. “They want to sell homes they build. Price increases are seen in the market for second-hand houses,” he added.
Homes sales increased by nearly 8 percent on an annual basis to more than 147,000 units in September, the latest data from the Turkish Statistical Institute (TÜİK) showed.
Mortgage-financed sales declined 16.4 percent in the month from a year ago to some 30,000 units, while first sales grew 6.3 percent to 44,000 units.
In the first nine months of the year, a total of 949,000 houses were sold in the country, marking an 18 percent decline from a year earlier. Mortgage-financed sales, on the other hand, dropped 64 percent year-on-year to 182,000 units.