Turkey’s State Minister and Deputy Prime Minister, Abdullatif Sener, has said a bill regulating the implementation of Turkey’s new mortgage system is top priority on the agenda for the 2006 parliamentary year. So within months investors will soon be able to take out a conventional mortgage for up to 30 years to finance their property purchase in Turkey.
Currently, Turkish banks offer only short-term loans, limiting the number of mortgages that can be granted. This has somewhat limited the real estate economy in Turkey today. However the reduction of extremely high levels of inflation through a floating foreign exchange regime and tight monetary policy have led to improvements in Turkey’s economic conditions. The country’s high interest rates have, in turn, fallen from around 24% at the end of 2004 to an encouraging 13% at the end of 2005.
Turkey has a huge population of just over 70 million which expands by 2 per cent each year and while 70 per cent of the population is younger than 30 years of age, there is a strong demand for property in Turkey. The new mortgage facilities will boost the Turkish property market to great new levels and we expect to see a dramatic increase in property construction in general, including holiday homes. With over 25 million tourists visiting Turkey each year, the new legislation will undoubtedly encourage further growth in tourism and create some encouraging new buy-to-let opportunities.
Turkey boasts some stunning mountain and coastal scenery as well as a rich and exciting culture, making it a top worldwide tourist destination. Added to this, the current economic climate in Turkey is strong and actively favours foreign investment in the property market, while most experts predict it is now sitting on the brink of a property boom. The introduction of the Turkish mortgage will prove invaluable to finance purchases in numerous new developments currently under construction in prime beach-front locations - it seems there has never been a better time to buy into this growing property investment market.
Finally, with Turkey’s EU accession due sooner rather than later, the Turkish mortgage will go a long way to bring Turkey into line with the standards and practices expected from worldwide property purchasers. We believe the results will prove very inspiring to our investors.
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