VAT cuts promote luxury home sales in Turkey
Güncelleme Tarihi:
by Meltem Kara - Hürriyet
Oluşturulma Tarihi: Nisan 01, 2009 00:00
ISTANBUL - Government’s stimulus package includes lowering of the value added tax from 18 to 8 percent for three months for homes over 150 square meters. The tax cut has led to an average of 10 percent decreases in prices. Villa and luxury homes now have prices that are about equal to a modest three-bedroom apartment
All eyes have turned to luxury resident and villa projects after the government lowered the value added tax to 8 from 18 percent for three months for homes over 150 square meters.
The measure comes as a part of the government’s stimulus package. The tax cut has led to an average of 10 percent decreases in prices. Villa and luxury homes now have prices that are about equal to a modest three-bedroom apartment.
The government’s decision to temporarily cut the tax has led to sudden price decreases ranging from 30,000 Turkish Liras to 180,000 liras for units that are 150 square meters or more. However, sector leaders drew attention to the fact that low and medium-income groups did not benefit from this decision. Sector players demand that similar attractive measures should be applied to the whole sector and not only to homes of 150 square meters or more. They expect the stimulus decision to be expanded to homes smaller than 150 square meters.
Visits and calls to the sales offices of luxury houses have increased in the past weeks, according to sector representatives. This increase has not yet reflected on sales statistics, they added. One reason for the lack of change in sales figures is the expectation that the Turkish Central Bank will decrease home loan interests by one point as it did in interest rates. The VAT rate applied to homes smaller than 150 square meters is 1 percent anyway. Since prices of homes larger than 150 square meters are much higher than medium-size apartments, the tax cut reflects as a significant price cut.
At Teknik Yapı’s Uprise Elite Project, prices of 240-square-meter units dropped from 898,000 liras to 822,000 liras. In Uphill Court Bahçeşehir, 171-square-meter apartments are now priced at 523,000 liras, down from 575,000 liras.
Significant reductions in luxury home prices
Hektaş Construction’s İdealist Kent Project offers 390-square-meter houses for 1.33 million liras, down from 1.5 million.
Balkaya Construction’s Citycourt villas used to start from 885,000 Turkish liras. After the tax cut, they are now down by 75,000, offered at 810,000 liras. Duplex apartments for 627,000 liras are now priced at 574,000 liras.
Saros İnşaat’s Zeytinsuyu Tepesi villas are down to $175,000 from their previous price of $250,000.
At Doğa Gayrımenkul’s Doğa Hanımeli Project, a 3+1 apartment of 140 square meters is down from $600,000 to $360,000. At Ağaoğlu’s My World Ataşehir project, prices range between 269,000 Turkish liras to 1.14 million liras. Meanwhile, Yuvataş Construction pays half of the 8 percent VAT.
The top price of 938,000 liras at Tepe Park Villas is now down to 860,000 liras. İNDER President Yaşar Aşçıoğlu said even though the decision is correct, it is not sufficient to inspire the market. Financial mechanisms should also participate in stimulus packages.
Teknik Yapı’s president Nazmi Durbakayım said to stimulate the real estate sector, VAT rates should be cut at several levels and the financial burden on small firms should be lifted.
Soyak’s acting CEO Emre Çamlıbel said Turkey’s housing problem stems from the fact that low- and medium-income groups cannot buy houses. To be able to overcome this problem, a large-scale housing policy should be adopted.
One of Dumankaya partners, Uğur Dumankaya said costs of builders should be eased and tax cuts for items at the production stage should be introduced. Alper Ünsal from Alper Construction suggested measures affecting the entire sector instead of small arrangements.
The measure comes as a part of the government’s stimulus package. The tax cut has led to an average of 10 percent decreases in prices. Villa and luxury homes now have prices that are about equal to a modest three-bedroom apartment.
The government’s decision to temporarily cut the tax has led to sudden price decreases ranging from 30,000 Turkish Liras to 180,000 liras for units that are 150 square meters or more. However, sector leaders drew attention to the fact that low and medium-income groups did not benefit from this decision. Sector players demand that similar attractive measures should be applied to the whole sector and not only to homes of 150 square meters or more. They expect the stimulus decision to be expanded to homes smaller than 150 square meters.
Visits and calls to the sales offices of luxury houses have increased in the past weeks, according to sector representatives. This increase has not yet reflected on sales statistics, they added. One reason for the lack of change in sales figures is the expectation that the Turkish Central Bank will decrease home loan interests by one point as it did in interest rates. The VAT rate applied to homes smaller than 150 square meters is 1 percent anyway. Since prices of homes larger than 150 square meters are much higher than medium-size apartments, the tax cut reflects as a significant price cut.
At Teknik Yapı’s Uprise Elite Project, prices of 240-square-meter units dropped from 898,000 liras to 822,000 liras. In Uphill Court Bahçeşehir, 171-square-meter apartments are now priced at 523,000 liras, down from 575,000 liras.
Significant reductions in luxury home prices
Hektaş Construction’s İdealist Kent Project offers 390-square-meter houses for 1.33 million liras, down from 1.5 million.
Balkaya Construction’s Citycourt villas used to start from 885,000 Turkish liras. After the tax cut, they are now down by 75,000, offered at 810,000 liras. Duplex apartments for 627,000 liras are now priced at 574,000 liras.
Saros İnşaat’s Zeytinsuyu Tepesi villas are down to $175,000 from their previous price of $250,000.
At Doğa Gayrımenkul’s Doğa Hanımeli Project, a 3+1 apartment of 140 square meters is down from $600,000 to $360,000. At Ağaoğlu’s My World Ataşehir project, prices range between 269,000 Turkish liras to 1.14 million liras. Meanwhile, Yuvataş Construction pays half of the 8 percent VAT.
The top price of 938,000 liras at Tepe Park Villas is now down to 860,000 liras. İNDER President Yaşar Aşçıoğlu said even though the decision is correct, it is not sufficient to inspire the market. Financial mechanisms should also participate in stimulus packages.
Teknik Yapı’s president Nazmi Durbakayım said to stimulate the real estate sector, VAT rates should be cut at several levels and the financial burden on small firms should be lifted.
Soyak’s acting CEO Emre Çamlıbel said Turkey’s housing problem stems from the fact that low- and medium-income groups cannot buy houses. To be able to overcome this problem, a large-scale housing policy should be adopted.
One of Dumankaya partners, Uğur Dumankaya said costs of builders should be eased and tax cuts for items at the production stage should be introduced. Alper Ünsal from Alper Construction suggested measures affecting the entire sector instead of small arrangements.