NEWSROOM

The increase of 3 times in Turkish Lira and 2 times in dollars in construction materials in the last 1.5 years was also reflected in the sales prices of houses. insaathesabi.com Co-Founder Mikail Karaca said, “The high increase in sales prices has shifted the demand to rental houses, but there is not enough supply. As the cost increase continues, the rents will continue to increase, which will continue to increase the sales prices of the apartments.”

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ISTANBUL (TR) - The rental house crisis continues in the construction sector, which has met with high foreign exchange-based price increases in raw materials during the pandemic process. While the increase in prices increased in TL and foreign currency basis, it almost doubled the project costs. According to the data of the Turkish Statistical Institute (TUIK), the Construction Cost Index increased by 44.76% annually in July 2021. According to the data of insaathesabi.com, which provides construction cost calculation services according to the provinces at current market prices, since March 2020, there has been an increase of 153% in iron and 75% in terms of dollars, in PVC by 305% in TL and 180% in dollars. Emphasizing that construction materials have been in the grip of foreign currency and TL based price increases since the pandemic, insaathesabi.com Co-Founder, Engineer and CMB Licensed Real Estate Appraisal Specialist Mikail Karaca, said, “In addition to raw materials, the increase in freight prices exceeding 500% in 1 year and up to 300% in imported products since 2018 triggered sales prices. The request was registered in the rental house. As the supply could not meet the demand, the tension of the rental houses increased. As long as the cost increases do not stop, the rental house crisis will remain up to date.”

Raw material prices continue to rise

Stating that the cost increase varies according to the provinces and the type of material used, Karaca said that the increase in raw materials will not stop easily and shared the following: “We see that the general construction costs have increased between 40 and 120% in the last 1 year across Turkey. However, these ratios offer a fairly general approach. Let's take an example of iron: The ton price of iron, which was 490 dollars in November 2020, increased to 740 dollars in May, 6 months later. There was a 50% price increase on a currency basis. On the other hand, the dollar rate, which was 7.80 in November, increased by 9% to 8.50 in May. In TL terms, the price increased by 60% again. Thus, after 1 year, there was an increase of 60% on TL basis again.”

Production slowed down in the pandemic could not meet demands in 2021

Stating that the increase in freight prices up to 10 times was reflected in the raw material prices, Karaca said, “Many sectors did not produce during the pandemic, the needs of the consumers accumulated. With the spread of vaccination, restrictions began to relax, orders increased. When production activities started simultaneously in all sectors, it became difficult to find containers to carry orders. The price of a container, which came to $2,000 from China in October 2020, has risen to around $13,000 when we come to today. Moreover, prices continue to rise. Imported products used in construction projects are also affected by exchange rate and TL-based price increases.”

Impact of international markets on Turkey

When the effects of international markets on the construction sector in Turkey are analyzed, Karaca said that the increase in raw material prices besides freight came to the fore and explained the prominent raw materials as follows: “Around 50 tons of iron, that is, approximately 400 thousand TL, is used in a thousand square meter structure. All electrical cables contain copper, and the price of copper has increased by 150% in the last 1.5 years. The price of aluminum, which is used in many places in construction from scaffolding to roofing, from door to window, has increased 2.5 times in the last 1.5 years. PVC, which is used in joinery and tiles in construction, has become one of the materials whose price has increased the most, with a rate of almost 3 times.”

98% accuracy rate in construction cost calculation

Stating that the price of domestic products has also increased, Karaca explained this situation as follows: “If a product whose market is 50 TL in Turkey is sold by a European company for 10 Euros, roughly 100 TL, the local producer will be able to sell abroad, where they will earn more money. is turning. This is exactly why we broke the export record in the history of the Republic. A customer from Turkey may buy the product from a domestic manufacturer, but that product now finds a market for 100 TL, so its price automatically increases. On the other hand, manufacturers who agreed to sell for 6 months before the pandemic, now take the payment in cash and start making the delivery 2-3 months later because they cannot produce the goods.” Pointing out that as insaathesabi.com, they calculate the cost increase according to the provinces and the type of material used, Karaca said, “We monitor the global market, raw material prices, exchange rates, price variability of materials separately for 81 provinces. As the only company in Turkey with construction cost software, we achieve 98% accuracy rates.”