President Recep Tayyip Erdoğan on Monday pledged arrangements to boost the purchasing power of lower-income citizens, as he said the government is aware of the difficulties created by the high cost of living.
Erdoğan also announced several measures to address the soaring real estate prices, as residents struggle to find affordable homes to rent or buy.
Propelled by rising energy, food and housing prices, Turkey’s annual inflation runs at a 20-year high of nearly 70%.
Soaring commodity prices and Russia’s invasion of Ukraine, which led to a surge in gas, oil and grain prices, have compounded the situation in import-reliant Turkey.
Speaking after a Cabinet meeting, Erdoğan reiterated the government's determination to address the soaring prices and said they would work to improve the purchasing power of lower-income households through arrangements as of July.
"We are aware of the decline in the purchasing power of our low-income citizens. We are trying to compensate for the decline with the increases we have made in wages," he said.
Erdoğan said cheaper housing loans would be provided to those who convert their foreign exchange savings to Turkish lira or sell their gold to the central bank to use in purchases of houses worth up to TL 2 million (around $130,000).
The rates on the loans would be a monthly 0.89% with a maturity of up to 10 years, he said.
Ankara has called on individuals and companies to convert their foreign exchange savings to lira to support the currency and unveiled a scheme in December to boost lira deposits by protecting them against exchange rate volatility.
Erdoğan said the measure on housing loans would support this effort, reversing a years-long dollarization trend.
He said loans of up to TL 2 million with a monthly rate of 0.99% and a maturity of 10 years would be provided to first-time homeowners.
Loans with 36-month maturities would be provided to construction companies to complete some projects if they promise to keep sale prices unchanged for a year, Erdoğan said.
"With this, we aim for projects under construction to be completed quickly, increasing the housing supply in the short term and thereby bringing the prices to balance," he said.
Turkey’s residential property price index (RPPI) leaped an annual 96.4% in February in nominal terms, according to central bank data.
In the country’s largest city Istanbul, home to around a fifth of Turkey’s population of 85 million, the index climbed 106.3% on the year.
The annual increase in the RPPI – which measures quality-adjusted price changes of homes – had stood at 77.5% in January and 59.7% in December. Nearly a year ago the index’s annual rise was 32%.
The February RPPI was up 26.9% in real terms on the year and rose 13.5% from a month earlier.
According to the Turkish Statistical Institute (TurkStat), average rents rose 19.7% year-over-year in March.
However, data from the real estate website EmlakJet and from competitor Sahibinden analyzed by Bahçeşehir University, show rents nearly doubled over that period.