Attacks by the outlawed terrorist organization Kurdistan Workers' Party (PKK) and plans to launch a cross border operation in northern Iraq are worrying the real estate sector.
Attacks by the outlawed terrorist organization Kurdistan Workers' Party (PKK) and plans to launch a cross border operation in northern Iraq are worrying the real estate sector. After stagnation in the summer the sector tried to recover from the slow down by launching marketing campaigns. However, as a result of the latest developments, people again postponed their plans to buy property. Sales and demand for long-term loans has decreased. Since Oct. 7, when cross border operations first appeared on the government's agenda, a notable drop in home loans has taken place. During the first week since Oct. 7, net growth in long-term debt of up to 30 years decreased by YTL35-85 million. The Turkish banking sector is now worrying that the year-end target of YTL30 billion in home loans will not be reached if the drop prevails.
The decrease in FED's interest rates signaled optimism in global markets, which lead Turkish Central Bank to also cut its interest rates. This, in turn, affected Turkish markets positively. Banks considered decreasing consumer loans and even added the revision of home loan interest rates on their agenda.
However, this time consumers postponed their buying plans not because of interest rates but because 13 soldiers were killed on Oct. 7 in northern Iraq, 12 more last week and because the Turkish Grand National Assembly granted the government official permit for a cross border operation in northern Iraq. In addition, tense diplomatic relations between the United States and Turkey increased the anxiety among consumers, leading them to postpone buying white goods or cars. Not only are consumers ready to risk their already-paid deposits but also have no longer the desire to take the responsibility for a long-term loan.
