Türkiye on Wednesday announced details of a new campaign for middle-income citizens looking for affordable housing, months after it unveiled its biggest social housing project ever seeking to make many low-income families homeowners amid soaring real estate prices and rents.
The new campaign features mortgages with lower interest rates and longer maturities, Treasury and Finance Minister Nureddin Nebati said.
Mortgage loans with amounts up to TL 5 million ($266,823) will have up to 15 years maturity and rates will start from 0.69%, Nebati told a news conference.
President Recep Tayyip Erdoğan in mid-September unveiled plans to spend around $50 billion to build 500,000 new homes and 50,000 offices over five years from 2023 through 2028, in what he dubbed Türkiye’s largest ever homeownership drive.
Millions applied for the project that focused on low-income families and that prioritized pensioners, young people, newly married, veterans, relatives of martyrs and the disabled.
"We prepared the 'My New Home Program' for middle-income citizens with advantageous rates, three-year finance ministry support in payments and a household income-based payment plan," Nebati said on Wednesday.
The loans with favorable rates will be extended to new housing, before, during or after construction, he also said.
Contractors that promise to build housing will also have credit guarantee fund-backed access to financing of some TL 25 billion, Nebati added.
The government has pressed on with a policy of fiscal and monetary stimulus including wage hikes, retirement benefits, social aid, energy and agriculture support to ease the pressure on households stemming mostly from soaring inflation.
Annual consumer price inflation in Türkiye fell sharply to 64.27% in December from the 84.39% reported in November. The decline was driven mainly by the favorable so-called base effect and marked a second straight monthly fall after inflation hit a 24-year high of 85.5% in October.
The government pledged to act as residents struggle to find affordable homes to rent or buy. Prices and rents have more than doubled over the last year across Türkiye, and even more in the largest cities, led by Istanbul.
Despite high borrowing costs and soaring prices, house sales in Türkiye rose 1% year-over-year to 1.28 million units from January through November. The growth eased sharply over the last months and lastly fell by over 34% in November.
Households view real estate as an attractive investment tool to shield themselves from inflation that has been mainly fueled by soaring food, commodity and energy prices, which rocketed following Russia’s invasion of Ukraine.