Thursday, September 20, 2018

Updates on the Turkish economy: Lending rates up, new laws for use of currencies and much more

Recent month have not been very kind to the Turkish economy and particularly the Turkish lira has taken a deep fall loosing 40 percent to the United States Dollar.

As a counter measure the Turkish government and Central Bank has taken several initiatives to counter measure, some of which are related to the real estate market.

So lets take a look at these.

- Lending rate up to 24 percent -
The lending benchmark has been increased by more than 6 percent and is now 24 percent and will eventually make it more expensive to get a mortgage on your Turkish property. 

This will primarily affect the local Turkish buyers since they are the primary loan takers of Turkish mortgages. 
Europeans tend to either pay cash or obtain mortgages from their home countries since this is a lot cheaper and easier.

And with the market for Turkish buyers already being effected due to the general crisis, this increase of lending rate will not have a big effect, since the damage has already been done on the local markets.

- Investment levels for getting citizenship has been cut -
Many of you most likely did not even know this, but Turkey actually has a "invest for citizenship" program and have had it for many years.

This is obviously not of any interest to any Europeans, but for many Arabs and Middle East citizens obtaining a Turkish citizenship has several advantages.

Now this has become a lot easier and you can apply for Turkish citizenship in case you invest for property worth 250.000 USD, with the old limit being a whooping 1.000.000 USD.

Such an investment program is never going to make a big impact in the market but surely these lower investment levels will not be bad for the sector.

To read more about this please click here (English only)

- New laws on currencies used for contracts -
In a more controversial move the Turkish government has banned use of foreign currencies for all contracts forcing the use of the Turkish lira.

Currently it is quite common to use either the Euro or USD when buying and selling real estate, for rental contract and other more valuable contract and agreements. 

As of middle of October 2018 this will no longer be allowed.

This new law had some potential to do some real harm in the real estate sector, since especially foreigners would have a hard time understanding why they should stick to the weak and unstable lira.

So when it was also announced that foreigners and Turks living abroad is exempt from this law there was a huge relief. 

Surely some domestic developers will have a hard time living up to the new law, but overall it will again have only minor effect on the market.

- The latest numbers from Turkish Statistics Institute -
Lets round this blog of by bringing you the latest figures from TÜIK, Turkish Statistics Institute.

- House sales across Turkey declined 12.5 percent on a yearly basis in August

- There was a 67 percent yearly decrease in mortgaged sales.

- A total of 105,154 properties were sold across Turkey in August

- Iraqis topped the list of foreign buyers with 944 properties, followed by Iranians (394), Saudis (275), Kuwaitis (271) and Russians (192).

- Top destination was Istanbul with 1,141 sold units, followed by Antalya (which includes Alanya) with 675 units, Bursa with 307 units and Ankara with 305 units.

That was it for now - let us know in case you have any questions or comments. 

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