Yavuz IŞIK
THBB Yönetim Kurulu Başkanı
President
The year 2021 that we left behind was highly animated in terms of the economy of Turkey. The high-level price movement encountered in every sector has been the first item of the agenda in the construction sector as well.
The latest data concerning the Construction Cost Index belongs to November. Accordingly, it appears that the construction cost has increased by 49% in the last year. The ratio of increase only in November is 7,77% compared to the previous month. When considered in view of either buildings or the structures outside buildings, an annual increase of 50% stands out, which shows us that behind the price increase is cost inflation rather than a demand-oriented one. While the increase ratio in material prices was 60%, the increase in labor costs took place as 22% according to TÜİK figures. Construction costs will keep incurring adverse impacts as labor costs will rise following the increase in the minimum wage. It must not be overlooked that the December data, which has not been announced yet, has not had an impact on the said figures. It appears to us as a high probability that the increase in the entirety of the year will be higher.
While the Ready Mixed Concrete Index that we draw up every month points to the acceleration in construction activities particularly in August, September, October, and November, it also shows that a very serious contraction was experienced in December. In 2022, the demand for housing will increase as long as the housing loan interest rate declines. The construction sector will be able to reanimate following the support of not only public banks but also private banks in this process. Consumers’ continuation of purchasing power for housing demand, economic stabilization, and predictability are critical factors.