Home    Housing Price Increase Rate Is Falling Down

Housing prices are on the run for quite some time now. The ever-developing construction sector, low commodity prices, the dynamic young population of Turkey, the political developments that took place in the last few years all had an impact on the said increase rates. However, the future of housing sector may not carry such increase rates in selling prices due to many reasons that are listed below:

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Developments in the Construction Sector

Construction is one of the major sectors, which can absorb a lot of employment as well. However, it is a traditional sector that is not considered as a high-technology field. It is thought as one of the driving sectors for developing countries such as Turkey. Number of projects received by the Turkish contractors verifies this. Turkey ranks second in the said area in the world after China, which is another developing country.

The drawbacks of the sector is that like white appliances sector, once a refrigerator has been purchased, it will take years for the consumer to buy another one and even then the consumer would buy it not because he/she needs it but due to a artificial need created by marketing strategies based on a supposedly existing need, which actually does not exist. Construction sector is similar in that there are a certain number of houses that can be sold and bought. On the other hand, the profits of such sectors are relatively low due to the technology being used. Although, there are many innovations are made in the sector even as we speak, in the area of concrete technologies, smart homes, etc.; still it is relatively a low-tech field when compared to the sectors like semiconductors, electronic communication, etc., which in turn results in less profits and less revenues for the country.

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Low Commodity Prices

Low commodity prices have been a blessing for Turkey during the hardships that it has been through for the recent years. However, the construction sector in Turkey may not depend on that since the prices of major commodities are all driven by external factors, so it would not be wise to plan on that forever. A new crisis in the Middle East may take place any day now, which will lead to a jump in the crude oil prices.

Demographics of Turkey

Turkey is still the youngest country in Europe, but it is not anymore considered the same way compared to the rest of the world. Meanwhile, it will look like another European country by 2050s. The average age group of Turkey is in their mid-thirties today, which is the major factor driving the increases in housing prices, but even so that cannot be fully taken advantage of due to the same age group having insufficient income. As a result, the aging population of Turkey will probably not be one of the major factors that drive the increases in the housing price rates.

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Political Turmoil

The way in which the political turmoils affect housing sales, hence the prices, is an interesting issue. For example, Iraq and Syria have been experiencing political unstability for years and also today. This in turn has become one of the major factors driving the housing sales and the prices in Turkey, when combined with the increase in the exchange rate of U.S. dollar against the Turkish Lira, since the citizens of said countries keep their wealth and assests in U.S. dollars.

It may not appear as effective as it is when the number of houses sold to the citizens of such countries that are in turmoil such as Iraq, Syria, Iran, Afghanistan, and gulf countries for that matter, since their citizens have been observed as to having similar purchasing habits and trends when it comes to housing. One reason may be that although gulf countries may not appear as they have political unstability; they are likely to have one at any time due to the way that the antidemocratic implementations executed in those countries make their citizens feel, e.g. Qatar crisis that is happening these days. As a result, the sector cannot depend on the political stabilities of the neighbouring countries as well as their unstabilities, since they are totally unpredictable as to how they will affect the construction sector and this goes for the political situation in Turkey as well.

 

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