SETA Report Claims Social Housing Can Solve Turkey’s Housing Problem

November 1, 2022

Turkey’s first solution to the ongoing global housing crisis is the comprehensive and long-term social housing project called "First Home, First Workplace."

Turkey-based think tank SETA (Foundation for Political, Economic and Social Research) has recently published a 54-page report entitled Social Housing as a Solution to the Housing Problem. The report analyzes the causes and consequences of house inflation, and the potential impacts of the ongoing efforts to resolve the recent surge in house prices in Turkey. The report evaluates supply and demand dynamics in the Turkish housing market and discusses the international dynamics leading to soaring house prices.

House inflation is a recent critical challenge of the Turkish economy. Commodity price increases, supply-demand imbalance—especially the slowdown of home construction during the COVID19 pandemic—and the rapidly increasing demand for housing after the pandemic have led to volatile prices across the world.

A comprehensive and long-term solution to the housing crisis

Limitations on housing loans and rent increases have brought a temporary relief in Turkey. However, policymakers focus on solutions that will have longer term impacts, such as support for housing construction and the new social housing projects.

In this direction, Turkey’s first solution to the ongoing global housing crisis is the comprehensive and long-term social housing project called “İlk Evim, İlk Iş Yerim” (First Home, First Workplace). This first step is an ambitious project with the aim of making people homeowners, especially those who are the most affected by the rapid increase in housing prices. The project offers housing, land lots, or workplaces to citizens who do not own property, with relatively long-term payback periods extending to 20 years and affordable installments. The project has been introduced as the largest social housing project in the history of the modern Turkish Republic.

The main problem in the housing sector is the disruption in the supply and demand balance. More specifically, internal and external factors cause the demand to swell and the supply to weaken. Without disrupting the functioning of the market mechanism, the main role public interventions can play at this point is to focus on supporting the increase of supply, such as social housing, and to offer subsidies to the construction processes. New projects such as land subsidies are also valuable in this respect.

The demand-oriented policies of the past, including cheap loans, loan abundance, and extension of maturities to stimulate demand were directed step by step towards production incentives such as reducing costs, and land and infrastructure support, which will increase production and supply. The government’s goal with the new projects to be developed in this direction is to stabilize housing prices and rents, and to restore price stability.

Affordable housing in almost every city

Currently the main problem of the housing market in Turkey is the lack of supply. The sector, which has experienced a serious contraction since, at least, 2017 and especially since the pandemic period starting in 2020, could not keep up with the booming demand after the pandemic. In 2022, the contraction in construction reached 11%. The “İlk Evim, İlk Iş Yerim” project is designed especially for low-income groups.

Affordability is the key issue here. Low prices and long-term payment options provide a serious advantage to people with weak purchasing power. Access to housing is expanded with appropriate installment payments for social housing and land, at a certain percentage of the minimum wage according to the 2023 projection and in line with savings’ rates.

In almost every city, the opportunity to become a homeowner is offered to those most affected by the housing price increases with monthly installments that are significantly lower than monthly rents.

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