High housing production under less regulated market conditions in Turkey

Annual housing starts have been between 500-600 thousand dwelling units in most years during the last two decades in Turkey, and went up as high as 823 thousand in the year 2011. These figures are likely to be greater than the need. High levels of housing production occur without noticeable policies addressed to demand or supply sides of the housing market. This implies that housing markets in Turkey operate under highly competitive conditions without much regulation by central and local governments. However, one of the outcomes of the less regulated housing markets is the great variation of housing starts among provinces of Turkey. Much less than needed number of dwelling units in accordance to the newly formed households are produced in certain provinces, whereas authorized housing production comfortably meets the need in many other provinces. Holiday homes production, particularly along the coastal areas contribute to high housing output in those provinces. It appears that housebuilders produce more housing in the regions where they can sell easily and at relatively higher price, with respect to less affluent regions. Housebuilders have developed peculiar ways of production and marketing housing in settlements where they have difficulties of selling dwellings that they produce. In this paper, after discussing the level of regulation of housing markets in Turkey, the relationship between housing price levels and the amount of housing starts per newly formed household in the eight sampled cities is studied. This is followed by the investigation of the ways in which housebuilders produce and sell housing in those cities in order to identify the factors that affect housebuildersí bussiness strategies and behaviour.