In October, 94 percent of homes were sold without credit: Who buys these homes?

In an environment where the level of housing prices throughout the country is far from affordable, the level of houses sold without loans is striking.

According to data announced today by the Turkish Statistical Institute (TUIK), housing sales decreased by 8.7 percent annually in October 2023, falling to 93,761.

Sales of mortgage homes, which are defined as sales on credit, decreased by 58 percent in the same period, falling to 5,577. That is, in October, 88,184 homes were purchased without mortgage credit.

It should be noted that in the first 10 months of the year, 83 percent of the houses sold were without credit.

While total sales decreased 14.3 percent in the January-October 2023 period compared to the same period of the previous year, falling to 993,835; In the same period, home sales with credit decreased 31.2 percent to 166,461.

Well, according to official data, even to buy a medium-sized apartment with a loan you need 1.7 million Turkish liras saved; In other words, since it has become impossible to buy a house with a loan after increasing interest rates, who can buy these houses?

THE PROPORTION OF THOSE ABLE TO BUY WITH CASH INCREASED

Speaking to Sozcu.com.tr, Cansel Turgut Yazıcı, CEO of Eva Gayrimenkul Değerleme, said: He made the following assessment:

“Even in the best period of home sales in Turkey, 20 to 25 percent of sales were made with a mortgage, so 70 percent of sales were already made in cash. Now this figure has increased even more.

This year, the share of mortgaged home sales in total home sales is about 6 percent. Therefore, the current figure, which was 20 to 25 percent, has decreased to 6 percent.”

‘THOSE WHO GOT CHEAP LOANS WERE THE PEOPLE WHO WERE ABLE TO GET THEM IN CASH’

Speaking to Sozcu.com.tr, real estate appraisal expert Ahmet Büyükduman and real estate appraiser Celal Erdoğdu said: They noted that a significant portion of those who bought homes with low-interest loans in previous periods were those who could already own a home with a down payment without needing to apply for any loans.

Büyükduman said: “When loan interest rates fell, those who could buy with cash also bought on credit. Because, in fact, a significant part of those who benefit from the loan are people who have the financial power to buy those houses without using a loan,” he said.

Erdoğdu, on the other hand, says the following, similar to Büyükduman:

“As home loan interest rates decrease, home sales don’t actually increase, but credit home sales increase. Since you have access to credit, you prefer to use credit instead of cash. So when we say people who can buy a house, we are talking about people who have savings and wealth. “People who have better income levels and can save money, but when they have the opportunity they take advantage of cheap loans.”

‘WE WARN THAT CHEAP CREDITS ARE A TRANSFER OF WEALTH’

Büyükduman reminds us that this is why he issued warnings during the campaigns for low-interest housing loans:

“A significant portion of those who can buy a house do not need a loan anyway. However, we still warn them that “this is a wealth transfer” because they bought houses using cheap interest loans during campaign periods. “Official data also supports this inference.”

‘IT IS COLLECTED IN THE HANDS OF THOSE WHO HAVE A HOUSE AND MONEY’

Erdoğdu explained that this situation can be understood by the fact that home ownership rates are not increasing:

“In Turkey, the people who really buy houses are those who have a certain income. We can see this from here: home ownership is not increasing; in fact, it has decreased to 57 percent.

If houses are constantly selling, but ownership is decreasing, in whose hands are these houses collected? This means that these houses are concentrated in the hands of those who already own a house and have money.”

‘THOSE WHO CAN DETERMINE THE PRICE OF THE GOODS THEY SELL ACCORDING TO INFLATION’ ARE ALSO EFFECTIVE

Büyükduman points out another segment of those who can buy a house without resorting to a mortgage loan.

Büyükduman stated that the income of the fixed income salaried segment did not increase as much as the increase in housing prices, so this segment was unable to access housing, and made the following assessment:

“The interest rates on loans are high. Some of those using the loan are middle-income salaried people. Therefore, among those who create demand in the market there are freelancers, traders and merchants, and they can determine the price of the goods they sell based on inflation.

In other words, we see that while the income level of a group of wage earners in society decreases in real terms, there are also those who are not affected by this.”