Help to buy scheme for Turkish property buyers
The introduction of a ‘help to buy’ scheme for Turkish buyers is a bid to help stimulate domestic buying and construction projects and is likely to further boost the country’s real estate market. The scheme will raise equity for first time buyers who are struggling to come up with the required 25% deposit.
Record highsDespite the market slowing slightly last year, there were 1.16 million property units sold in 2014, a record number. During the same period mortgages expanded by 13%, around half the rate of previous years as financial uncertainty and high interest rates dulled demand.
Experts say the help to buy scheme is geared towards improving economic growth ahead of the election, and the move will likely see house prices rising which will lead to an increase in consumer spending, as well as an upswing in construction.
Building a futureAccording to TurkStat, the statistical institute, foreign buyers bought 18,959 properties in Turkey between January and November last year, an increase of 55.6% on the previous year. These foreign purchases contributed 3.3 billion Euros to the economy.
One of the government’s aims with the ‘help to buy’ scheme is to bring domestic property sales in line with investment purchases. The government will contribute 15% towards the deposit for first time buyers, opening up the market to a new group of potential buyers - the country’s rapidly growing middle class.
These measures are part of a package that the government says will boost Turkey’s 724 billion Euro economy.
The push to home ownership in Turkey will have a knock-on effect on construction. Turkish PM Ahmet Davutoglu said that construction kept Turkey moving. "Construction is one of the locomotive industries of our economy. This rise in demand will also relieve the building industry".
The rise and rise of foreign investmentInternational property investors continue to buy Turkish properties in their thousands, taking advantage of low prices and rising levels of demand. However, total home sales rose by 1% last year, a sharp drop from the average 24% rises seen in the preceding years, driven by money pumped into the emerging market by international central banks. Analysts say property investment is now in a phase of organic growth, providing a steady platform for future investment.
Investment top spotsAntalya was last year’s top foreign property buying location, with 34.5% of buyers purchasing property in the Mediterranean region. Close behind was the country’s economic and cultural powerhouse, Istanbul, which attracted 29.4% of foreign investment. This was driven by a surge of interest in buy-to-let apartments in Istanbul’s suburbs.
Istanbul’s property prices are growing at a faster rate than the rest of the country, but Antalya is still experiencing healthy growth.
This year’s big investmentDemand for higher end properties remains consistent, as foreign buyers continue to be attracted to luxury, serviced apartments in the stylish regions of Istanbul and Antalya. The help to buy scheme should boost the lower end of the market, prompting level and sustainable growth.
Expanding urban populations are also driving growth. Istanbul’s population has grown significantly over the past decade, which of course means that there is a high demand for homes at a commutable distance to the city centre. Business travel has also grown, creating demand for short-term accommodation. The response to this has been a rise in the number of serviced apartments, a more welcoming, homely alternative to hotels. These are becoming popular with longer-staying tourists or business visitors.
Serviced apartments offer separate sleeping and living areas as well as better equipped bathrooms and kitchens than you’d find in your typical hotel. Services vary based on guests’ needs.
Serviced apartments might just be 2015’s investment of choice, with big brand names like Kempinski, Fairmont and Viceroy all planning to offer this type of accommodation this year to meet growing business tourism.
The government’s strong commitment to improving infrastructure and continued property investment ensure that the fundamentals for Turkey’s property market are as strong as ever, making investing in Turkish property a confident choice.