Rising Costs Have Boosted Second-Hand Housing Prices to New Housing Prices

When March last year was compared with March this year, the ton of cement increased from 250 liras to 1000 liras by 300 percent, and the cubic meter of concrete increased from 220 liras to 800 liras by an increase of 300 percent. This situation caused a decrease in the number of newly built houses and the sale of old houses at new house prices.

Cost increases in the construction industry have made it impossible to build new housing. The power of middle-class citizens to buy a house has decreased considerably compared to previous years. According to IMKON data, there has been an average of 229 percent increase in material prices in the last 1 year. The ton of rebar, which was 5,500 TL in March 2021, increased by 190 percent to 16,000 TL in March 2022. Between March 2021 and March 2022; The ton of cement increased from 250 liras to 1000 liras with an increase of 300 percent, the cubic meter of concrete increased from 220 liras to 800 liras with an increase of 300 percent, the weight of aluminum increased from 35 liras to 95 liras with an increase of 171 percent, and the square meter of flat glass increased from 90 liras to 290 liras with an increase of 222 percent.

While the representatives of the construction industry stated that it is getting harder for the middle class to buy housing, they said that the companies will reflect the price hikes due to the decreasing supply in their housing prices. On the other hand, those who could not afford a new house turned to second-hand houses, which increased their prices. The price difference between old and new housing has decreased to 10 percent. TÜİK figures also drew attention to the increasing demand for second-hand homes. According to the data, while the sales share of second-hand homes in total residences was 65.2 percent in 2020, this rate increased to 69.1 percent in 2021.

Tahir Tellioğlu, President of the Confederation of Construction Contractors (İMKON), said, "Cement also triggers price increases for many materials. The average square meter unit price in Turkey, including land, increased to 12,000 TL. It was around 10,000 TL 2 months ago. In other words, 70 out of 100 people were able to buy a house. At the point we have come to, we have regressed to the 30-40 percent band."

Evaluating the second-hand demand, Zingat.com Sales and Commercial Relations Director Eser Karaismailoğlu said, "One of the three houses sold last year was sold in the last quarter. We saw that the price gap between the old house and the new house was closed after the sales were realized with high demand. We observe that the price difference manifests itself more in sales than in rentals. When we look at the price increase trends, when we look at the country in general, in the last year, housing prices have increased by about 60 percent. According to Zingat.com past advertisement data, there would normally be a price difference of 30–40 percent between new structures with the same features and old structures.

As of 2018, the share of first-hand houses decreased to 38 percent in 2019, and to 31 percent in 2020 and 2021. Of course, we cannot explain the narrowing of the spread with market dynamics alone. We know that in periods when interest rates are high, especially for investment-purpose housing purchases, housing demand is postponed, and the postponed demand accelerates sales in periods when interest rates decrease. Housing is still an attractive investment tool for our citizens who think that interest rates are below inflation in real terms and who want to invest.