Housing ambition

GYODER, the Association of Real Estate Investment Companies, expects a new mortgage finance scheme to energise much more than just the country’s housing market, writes Metin Demirsar. Gyoder, the Istanbul-based Association of Real Estate Investment Companies, is gearing up for a national housing finance system that is expected to galvanise Turkey’s construction industry and property market, allow middle and low-income families to become home owners, fuel economic growth across the country and draw in foreign investment. Turkey’s Grand National Assembly is slated to pass legislation on a legalised mortgage system at the start of 2006. “The mortgage system will be a sustainable financial model for the housing industry, banks and the public,” says Haluk Sur, chairman of GYODER and president of Ihlas Real Estate Investment Trust, one of Turkey’s leading property developers. He says that 60% of the country’s 75 million inhabitants will benefit.





Savings hit High inflation, combined with steep interest rates, has constrained the housing market and eroded the personal savings of millions of Turks for a generation. From 1978 to 2001, annual inflation based on consumer prices averaged anywhere between 47% and 125%. “In the 1960s and 1970s, a civil servant could buy a house with his retirement compensation and pension. In the 1980s, he could buy only a car. In the 1990s, his retirement compensation was enough only to purchase a few household appliances,” says Mr Sur, a civil and environmental engineer. Not only that but nearly 55% of all homes in Turkey are slum dwellings, not recorded by authorities and thus untaxed. Vast neighbourhoods of slum houses, known as ‘gece kondu’ (‘night landings’ – literally built overnight on private property or state lands by an influx of Anatolian peasantry), encircle the cities, mar the urban landscape and make up to 70% of the dwellings in the metropolitan areas of western Turkey. These shoddily built housing units are unsafe in earthquake-prone Turkey, Mr Sur says. Now, falling inflation, lower interest rates and a booming economy are at last helping to revive the housing market. In 2004, the economy grew by 9.9%, the highest among members of the Organisation for Economic Co-operation and Development, in the third successive year of robust growth, the State Institute of Statistics reports. Bankers predict that the economy would continue to improve in 2005, supported by an influx of foreign investment and the start of Turkey’s EU entry talks on October 3. At the end of September, year-to-year inflation, based on consumer prices, had fallen to 8%, the lowest level in more than 35 years. In November interest rates on 25-year housing loans dipped to a monthly 1.17% from 2.5% last year, and were expected to drop below 1% by the end of 2006. In the first nine months of 2005, housing loans stood at $6.607bn – about 7% of total bank loans, according to the Central Bank of Turkey. That was a huge increase on last year, when 100,445 individuals took out housing loans totalling $2.544bn (3.42% of all bank loans).


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