The strong consumer demand for homes is luring construction companies to roll out new development projects to build thousands of houses this year.
The latest data from the Turkish Statistical Institute (TÜİK) showed last week that home sales in December 2021 surged nearly 114 percent from a year ago to 226,503 units, while throughout 2021 sales reached a total of 1.49 million units, marking the second highest annual sales figure on record.
In the face of the strong demand, companies, which had previously shifted to a wait-and-see mode due to the rising costs and the adverse effects of the COVID-19 pandemic, are now gearing up to undertake a number of projects worth billions of Turkish Liras in 2022 to take advantage of the appetite for properties.
Demand for homes spiked because people turned to the purchases of real estate which they consider to a safe investment.
Those investments are expected to resolve the ongoing supply problems in the housing market.
Turkey needs 700,000 to 800,000 houses each year, however, in the past years home supply has been well short of meeting the demand, said Nazmi Durbakayım, head of the Istanbul Contractors’ Association (İNDER).
Some potential homebuyers unleashed the pent-up demand over the past months, he noted, adding that the number of houses presently being built is not enough.
“Once some insistently argued that there was a bubble in the local housing market. Now there is no quality houses out there in the market.”
He said that consumer demand for properties picked up starting November last year and demand is likely to continue in 2022 as the foreign exchange rates stabilize.
Companies, which acted very cautious over the past three years, are set to undertake investments in 2022, according to Altan Elmas, the chair of the Association of Housing Developers and Investors (KONUTDER).
“The players in the market, which notice the supply shortage, now have appetite for investment. But they have problems accessing finance,” he said, calling for government support.
“We have discussed this financing issue with Treasury and Finance Minister Nureddin Nebati. Firms need loans supported by the Credit Guarantee Fund scheme to carry out investments to boost supply.”
Elmas also noted that the rising costs are another major problem the construction companies are currently facing.
“In terms of the U.S. dollar, costs doubled in the first half of 2021. Thus, home prices should be expected to decline because supply increases. Also, it will take some time to resolve the supply-related problems,” he said.
TÜİK reported last week that the headline construction cost index leaped nearly 49 percent year-on-year in November 2021.
The index advances 7.9 percent from the previous month, the data showed.