Global housing market suffers its worst drop

Housing prices had broken record after record during the pandemic period. The increase that accelerated in 2020 was tied to a record series in 2021, and house prices showed a great increase all over the world. We can't shelter actions were taken in many countries, especially in Germany and England, and Turkey was one of the countries where housing prices increased the most.

While the rise in housing prices and rental house prices negatively affected students and low-income citizens, students started to take shelter actions to make their voices heard. While the protests had great repercussions, the government commissioned the social housing project to reduce housing prices, and TOKİ 250 thousand social housing projects were implemented in September.

THE LATEST SITUATION IN THE HOUSING MARKET

With the effect of cheap loans distributed during the pandemic period and the change in life preferences, the demand for housing broke a record, and the intense demand also increased house prices. The rise in inflation caused many banks, especially the US Federal Reserve, the European Union's Central Bank ECB and the Bank of England BoE, to increase their interest rates.

With the interest rate hikes made by the Central Banks, the interest rates on housing loans also started to rise. The fact that the incomes of people who want to buy a house did not increase as much as the housing prices also reduced the demand for housing. The war between Ukraine and Russia also made people more difficult economically.

WILL HOUSING PRICES REDUCE?

While the whole world continues to evaluate the turmoil in the housing market, Oxford Economics Chief Economist Adam Slater said that "the increase in mortgage rates in developed economies will put some housing markets into a deep crisis" and stated that a sharp decrease in housing prices is expected.

The housing price assessment made by the IMF, on the other hand, warned that a sharp decrease in housing prices may occur because the aggressive monetary tightening policies implemented by the Central Banks caused a rapid increase in housing costs, the credit conditions were tightened, the cost of borrowing increased and the value of the houses increased very quickly. The most important reason for the slowdown in house sales figures was the rise in interest rates.