The Turkish government is preparing to launch a new low-interest campaign for first-time homebuyers, in a move sought to ease access to residential properties and rein in soaring prices, according to a report released Monday.
The report comes days after Environment, Urbanization and Climate Change Minister Mehmet Özhaseki told the Sabah daily that the government planned to open some public lands for housing construction to reduce building costs.
The new campaign would include loans with a 120-month maturity term and a 1.20% interest rate, a separate report by the Sabah newspaper said. It seeks to encourage access to real estate for first-time homebuyers.
The low-interest credit support, according to the report, is expected to be provided through public banks and will come into effect in October, coinciding with the reopening of the Turkish Parliament.
The expected move comes following the Banking Regulation and Supervision Board (BDDK) regulation last month, aimed at encouraging first-time home buyers and curbing loans for people already owning residential property to stabilize the market and help curb the upward trajectory of housing prices.
The new credit campaign, which targets low and middle-income families, will provide the opportunity for them to become homeowners via payments similar to monthly rent.
The housing loans provided under favorable conditions will support home acquisition for the first time, and they will be allocated to new projects with specific standards and affordable price ranges.
The planned 1.2% interest rate and a 180-month maturity term for the first home buyers is thus expected to reduce the interest burden by 70% when compared to the current situation.
At the moment banks apply an average monthly interest rate of 3.23% for housing loans.
Over 122,000 homes were sold in Türkiye last month, according to the official data shared last week.
The home sales dropped by 1.1% in August when compared to last year, after recording nearly a 17% year-over-year increase in July, data from the Turkish Statistical Institute (TurkStat) showed Friday.
Leading the property market in Türkiye was its most populous city Istanbul where some 17,408 homes exchanged hands last month, making up 14.3% of all homes sold in the country.
Ankara ranked second at 11,007 sales, followed by the western province of Izmir at 6,504.
Households have been seeing real estate as an attractive investment tool to shield themselves from stubborn inflation, which subsequently eased to as low as 38.21% in June before rising again in July and August due to several taxes and a decline in the Turkish lira.
The data also showed that foreigners purchased some 3,058 homes in Türkiye last month, pointing to a 42% decline from a year ago.
Meanwhile, the residential property price index (RPPI) measuring the quality-adjusted price changes of homes increased by 94.7% in July when compared to the same period of the previous year, official data showed Monday.
According to data from the Central Bank of the Republic of Türkiye (CBRT), the RPPI increased by 7.3% on a monthly basis in July, while the real increase in this period was 38.0%.