Lowered interest rates have yet to revitalize housing sector

İstanbul Chamber of Real Estate Brokers President Sabri Ateş told the Anatolia news agency that while banks had lowered interest rates on home loans, “loan charges” had increased. “This means that for the consumer, there has been no change in the cost of a loan,” he noted. For a loan of TL 100,000, banks may charge TL 9,000 in fees, while also collecting TL 80,000-90,000 in interest on 120-month loans, Ateş said. “In a sense they are trying to hoodwink consumers, but in reality even if it looks like a discount, it isn't reflected in people's pockets. And the middle-income group doesn't take out loans at these levels,” he said.

Ateş noted that currently people who want to buy homes choose not to take out bank loans, opting instead to go with contractors who offer long-term payment plans at zero interest. “In this crisis period, contractors are not directing buyers to banks, but are handling their own financing; they're selling their homes with zero-interest payment plans that go up to 60 months,” he said.

“Don't believe news reports that say ‘interest rates have fallen and home sales are up.' I have around 9,000 members, and they're all lamenting the state of affairs. Nobody wants more than us for the housing market to be revived and for everyone to benefit from this,” Ateş said. He also noted that the trend in housing purchases in İstanbul favors newly constructed buildings built in compliance with earthquake safety standards over older homes, saying: “The sale of older homes has decreased significantly. Instead of buying an older home on a loan, they are buying newly constructed homes with convenient payment plans.” He also noted that homes once priced between TL 1,500 and 2,000 per square meter are now priced at around TL 1,000-1,500 per square meter.

Prices in Ankara reflect actual value

Ali Taylan, president of the executive board of the Ankara All Real Estate Agents Trade Chamber (ATEM), said interest rates had been rolled back to “good” levels, but that ATEM had received complaints that some banks had hiked up their loan processing fees to compensate for the difference. Taylan said that due to the summer season and the month of Ramadan, there had been no major changes in housing prices in Ankara, saying that even if increased activity is seen following the end of Ramadan, there would be no major increase in prices. “Prices will enter a normal increase period, and at any rate, if there is a major increase, then there will be a decrease in demand. Real estate prices aren't exceptionally low right now anyways; they are at their real value,” he said.

Taylan advised potential homebuyers to make educated decisions, saying that in order to make sure they are paying a reasonable price, they should work only with certified and registered real estate agents. Home prices in Ankara can vary greatly from district to district and even between different units in the same apartment building, Taylan said, citing this as why he declined to make a general statement on prices per square meter.

‘Negotiate with the bank over interest rates’

Ahmet Haluk Şamlı, president of the İzmir Chamber of Commerce's (İZTO) real estate committee, said the decreased interest rates had borne a psychological effect upon consumers and that the market had begun to “wriggle” a bit. This wriggling could turn into all-out enlivenment if rates drop a bit more and loan terms are made easier, he said. Şamlı noted that in a sense a “free market economy” existed between banks and consumers during the loan process, saying that bargaining was possible in terms of both interest rates and loan charges. “Recently, a customer of ours applied for a loan with a 1.19 percent interest rate; by the end of the process they had bargained it down to 1.10 percent. This discount means a difference of TL 4,000-5,000 on a TL 100,000 loan,” he said.

He said banks in İzmir have also decreased their loan fees and that consumers should act wisely to benefit from this and make sure discounts are given during the loan process. Şamlı said that home prices in İzmir had risen by around 10 percent compared to the period before interest rates began to drop. “The decrease in interest rates didn't automatically impact prices, but a bit of wriggling has started. In the period ahead, this will pave the way for an increase [in prices] of 25-30 percent. For this reason, it's the best time to buy for those who are able,” he said. He said homes in central İzmir begin at a price of about TL 1,500 per square meter.