TODAY’S – Turkish housing prices second fastest rising in world

Turkish housing prices second fastest rising in worldHousing prices in Turkey rose the second-fastest of any country in the world in 2014, according to the 2014 Global House Price Index, recently published by real estate consultation firm Knight Frank.Housing prices in Turkey on average increased by 14 percent in 2014, the second highest behind Ireland, where prices increased by 15 percent.

Dubai, the UK and Estonia rounded out the top five spots on the index. Turkey was sixth on the index last year, behind Dubai, China, Hong Kong, Taiwan and IndonesiaPrices have continued to rise in the Turkish housing market amid a sluggish year for sales.

A major problem is that the majority of houses being built are too expensive for most Turkish customers to afford, according to a recent report from the Housing Developers and Investors Association (KONUTDER).The report says there is demand in Istanbul for 72,000 homes built at a cost of TL 1,263 per square meter, but supply in that price range is lacking.

On the upper end, there is a demand for only 8,000 homes costing more than TL 3,000 per square meter, but over 63,000 homes in that price range are being built, indicating a huge imbalance.Official data show that between 2002 and 2011, 520,000 homes were built in Turkey.

This figure increased to as high as 800,000 in 2013. There are currently over 1 million housing units for sale in Turkey.

Speculation of a housing bubble spread through the markets when economist Nouriel Roubini last December cited Turkey as among the 18 countries whose housing markets are vulnerable to a possible meltdown. Roubini correctly predicted the US housing bubble and its collapse.

He pointed to Turkey as one of the overheating housing markets. However, other analysts have downplayed the notion of an impending collapse.

Housing sales dropped in Turkey throughout 2014 before recovering in the last quarter of the yearThe countryand#39s mass-housing agency, the Housing Development Administration of Turkey (TOKI), has overseen the construction of hundreds of thousands of housing units in the past decade, operating under the direct control of the Prime Ministerand#39s Office. However, the agency does not operate like a typical public housing institution.

It finances its projects by selling public land at submarket rates to private contractors, and critics have alleged that a significant portion of TOKI-built homes are actually allocated for upper-middle class buyers. The arrangement functions as a public-private scheme where private firms are the biggest benefactors.

In Istanbul alone, more than 100,000 TOKI homes have been built.

SOURCE: Today’s Zaman