A new record!

Dünya Executive - - COMMENTARY - Alaattin AKTAS Economist

Anew record was reached in June in home sales, but it’s not one to be proud of: it marks a historic low point. According to the data generated by the Turkish Statistica­l Institute in cooperatio­n with the General Directorat­e of Land Registry and Cadastre, only 61,000 houses were sold across Turkey in June, a 49 percent decrease compared to the 119,000 sales in the same month of the previous year. The 61,000 sales in June were the lowest in a month since Turkey began keeping such recor

ds in 2013. So, there is a record in this respect.

Over the 78 months in which Turkey has kept these records, the second lowest home sales were in January this year at 73,000 units. Sales in the first six months of the year came in at 506,000 units, a decrease of about 22 percent compared to the 646,000 units sold in the same period last year.

Initial sales decreased by 42 percent

New home sales are more important than the total number. The changing of hands of a five-year, ten-year, or twenty-year old home does not do much good for the constructi­on sector and therefore for the economy. New home sales in June were only 23,000 units, a 59 percent decrease compared to the 57,000 units sold in the same month last year. New home sales didn’t go bad in June alone; sales in the first six months were 31 percent lower than last year.

Housing stock still growing

Now let’s compare two data: new home sales to the number of homes completed and made ready for use and granted occupancy permits. In the first quarter of the year, 246,000 homes were granted an occupancy permit, meaning they became ready to use.

How many new home sales were made in the first quarter of this year? 108,000. Even if the new home sales consisted of homes with building licenses, the housing stock increased by 138,000 in the first quarter. There is no mistake here: The home supply in the first three months of this year increased by 246,000 units while sales over the first half of the year were only 206,000 units.

Nobody is buying a mortgaged house

Whether directly through the use of loans from the bank or through contractor companies mortgaging the property, mortgage sales are now almost at a standstill. Mortgage sales in June were 85 percent less than last year. The problem is not only specific to June. There was a 59 percent decrease in mortgage sales in the first six months compared to last year. Mortgaged new home sales showed a more dramatic decline in June - 88 percent – as well as for the first six months - 63 percent. Lowering mortgage rates, a tactic used by public banks, cannot have a widespread effect. These low-interest loans are already available under certain conditions.

The majority of potential buyers are worried about the future and therefore they both delay home purchases and avoid using credit. Since today’s interest rate is high and the expectatio­n is that it will decrease, those who are considerin­g buying a house prefer to wait. Moreover, the fact that housing prices are rising slightly or remain constant in some places and even decrease, increases the number of people who prefer to wait.

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