Türkiye on Tuesday laid the foundations for the first houses that will be built under the country’s biggest ever social housing project, seeking to make many low-income families homeowners amid soaring real estate prices and rents.
"We have started a new urbanism breakthrough in Türkiye as of today that now surrounds all of our provinces and districts," President Recep Tayyip Erdoğan told a groundbreaking ceremony in the Sincan district of the capital Ankara.
Erdoğan last month unveiled plans to build 500,000 new homes and 50,000 offices over five years from 2023 through 2028 in what he dubbed the country’s largest ever home-ownership drive. The project also includes 250,000 land plots that will be sold to qualifying applicants.
Foundations for the initial 5,615 homes were simultaneously laid across 17 provinces on Tuesday.
Nearly 8 million households applied for the campaign so far, Erdoğan said, stressing it demonstrated the extent to which "we are doing the right job" and showed the enormous need they are meeting. Applications will remain open through the end of October.
Some 5% of homes, or 12,500, will be allocated for veterans and relatives of martyrs, a figure that will also apply to disabled households. A 50,000 quota will be allocated for pensioners and youth respectively.
Some 240,000 housing units, 100,000 plots and 10,000 offices are planned to be built and delivered across Türkiye’s 81 provinces in the first stage.
The project will have a total investment value of around TL 900 billion. Erdoğan has said with the multiplier effect, the economic impact of the project would amount to TL 2 trillion.
The project will offer properties at affordable interest rates, prices and payment plans. The government will extend the repayment period to 20 years to keep monthly payments at as low as TL 2,280, according to the plan.
There will be an income cap on eligibility for applying for the project. Households with an income below TL 18,000 in Istanbul and TL 16,000 in other provinces and those who are not currently homeowners are able to apply.
The Housing Development Administration (TOKI) will be in charge of the project. The developer has built some 1.17 million houses in the last 20 years.
The government had pledged to act as residents struggle to find affordable homes to rent or buy, and soaring prices triggered alarm. Prices and rents have more than doubled over the last year across the country, and even more in the largest cities.
Erdoğan on Tuesday lashed out at what he said were hikes that "cannot be compared to any economic measure," stressing these had aggrieved many citizens.
"Landlords have persecuted their tenants," the president stressed.
House prices across Türkiye rocketed by 185% from a year ago in August, according to the latest data from the Central Bank of the Republic of Türkiye (CBRT).
In the country’s largest city Istanbul, home to around a fifth of Türkiye’s population of 85 million, the residential property price index (RPPI) climbed 211% year-over-year in August in nominal terms.
The rise in Ankara was 193.5%, while prices in Izmir, the third largest city, rocketed 175.7% on an annual basis, according to the CBRT data.
Despite high borrowing costs and soaring prices, house sales in Türkiye have jumped 11.4%% year-over-year from January through September this year, with more than 1 million houses exchanging hands, according to the Turkish Statistical Institute (TurkStat).
The rise came amid declining supply and high costs, with households viewing real estate as an attractive investment tool to shield themselves from inflation that runs at 83.45%, fueled by soaring food and energy prices, which rocketed following Russia’s invasion of Ukraine.
To tackle high prices, the government has announced an upper limit on annual increases in home rentals. The new regulation caps the annual hikes in rents at 25%.
Rent, along with petrol vehicles and cigarettes, has the heaviest weighting in the official inflation basket.