Sales bubble in housing
It looks like this time we are facing a sales bubble in housing. Announced last week, housing sales statistics for October revealed a series of question marks.
Total sales in October increased by 19 percent to 147,000. Mortgaged sales fell 79 percent to 8,000 while non-mortgage sales rose by 64 percent to 138,000. Mortgaged first sales decreased by 72 percent, other first sales increased by 75 percent, the total increase was 31 percent, which means first sales with cash spiked to 70,000 from 40,000.
Since mortgage sales are at the bottom, we cannot talk about the success of campaigns covered by these sales. Instead, people flew in to buy housing with cash. Or, those who earn a lot of money from foreign currency, are now turning to buying housing with those earnings. What happened so that home sales climbed so high, reaching a figure even the sector did not predict?
We put that question to Ali Aydin, vice president of the Confederation of Construction Contractors (IMKON). He emphasized that sales should not be considered as sales in the classic sense.
“Suppose an apartment with 20 flats qualifies for urban transformation. As modernization plans are made, the number of floors are increased, raising the number of flats to 30. The resi- dents of the apartment will have their flats renewed. That’s their win. The additional ten new flats will belong to the contractor.
But until the construction is completed, the owners of the 30 apartments are the residents. In fact, however, the extra 10 flats belong to the contractor, according to the logic of the agreement between the parties. But the situation is different according to the legislation.”
“The flat owners have to sell those 10 flats on which they signed an agreement to the contractor, because it is the only way for the contractor to own those flats. In other words, the contractor actually buys his own flats. Here is an example for a sale that is actually not a sale: Those 10 apartments entered the statistics as a first sale. The contractor sells these apartments over time. This time, those same 10 flat enter into the statistics as second hand sales. It’s a complete repetition.”
Aydin says that more apartments are built than the urban transformation plans in swaps for land.
For example, a contractor agrees with the landowner to give 40 flats and retain 60 flats of the 100 he will build. When the construction is completed, the contractor has to buy the 60 apartments, on paper.
Thus, you have 60 first sales and 60 second hand sales when the contractor sells them.