The Cost-Price Gap in the Construction Sector and Housing Finance

The construction sector is a strategic ecosystem that addresses fundamental needs—such as housing, workplaces, and tourism—while fueling dozens of sub-sectors ranging from cement, iron, and sanitary ware to paint, furniture, and home appliances. This article examines, from a risk management perspective, the market impact of the widening gap between construction cost inflation—which reached 28.33% annually in July 2026—and housing prices, which rose by 25% annually but declined by 5.1% in real terms. It offers a comparative analysis of the investment decisions made by cash buyers (weighing deposit returns against earthquake risk) versus the financing challenges faced by credit-dependent buyers. Furthermore, the article evaluates the implications of market segmentation—spanning luxury housing, social housing, vacation homes, commercial properties, and hotels—on income distribution, drawing on case studies from China (Evergrande), Germany (construction sector stagnation), and Türkiye (urban transformation and the wave of concordat filings).

Contents

1. Introduction: The Economic Multiplier Effect of the Construction Sector
2. Cost Dynamics: An Analysis Centered on Cement, Steel, and Labor
3. Price Spreads and Financing Challenges
4. Housing Diversity and Segmentation Effects
5. Impacts on Income Distribution
6. Global and Local Case Studies
7. The Teolupus Perspective: Corporate Risk Management and Internal Audit in Construction
8. Rationale for Data Set Compilation (Tables and Graphs)
9. Frequently Asked Questions (FAQ)
10. References

1. Introduction: The Economic Multiplier Effect of the Construction Sector

The global construction sector is a vast ecosystem that functions as an economic engine, in addition to meeting fundamental societal needs such as housing and workspace. It generates a powerful multiplier effect not only through the direct employment it creates but also by fueling hundreds of sub-sectors—including cement, iron, sanitary ware, paint, glass, wood products, furniture, and major appliances. However, inflationary pressures in global and local markets in recent years have created an unusual gap between construction costs and final consumer prices. This cost-price imbalance profoundly affects both the risk appetite of housing developers and the financing models used by consumers.

The narrowing of the gap has turned into a concrete slowdown in the sector. According to TUIK’s June 2026 Construction Production Index, construction production decreased by 6% and building construction decreased by 7.5% compared to the same month of the previous year. (TUIK, 2026) Mamak Construction Contractors Association (MIMDER) President Hamza Can describes this picture as “a serious warning for the future of the sector” (Ankhaber, August 2026). In the same period, construction ranks first among all sectors in the number of companies and individuals in the concordat process with 564 files (Bursa Saati). These two indicators determine the main question of the article: How should a sector that cannot reflect the cost increase in price rebuild its financing and risk management architecture?

2. Cost Dynamics: An Analysis Centered on Cement, Iron, and Labor

Data from the Turkish Statistical Institute (TUIK) clearly illustrates the scale of the rise in construction costs. The annual increase peaked at 46.35% in July 2024, receded to 22.98% in July 2025, and was recorded at 24.50% in December 2025 (TUIK Construction Cost Index, December 2025). In 2026, however, cost inflation regained momentum: the index rose by 1.15% monthly and 28.33% annually in July 2026, with the materials index climbing 27.13% and the labor index 30.51% year-on-year. The fact that labor cost increases have outpaced material costs indicates that the cost pressure facing the sector stems not only from commodity prices but also from a shortage of skilled labor (TUIK Construction Cost Index July 2026/Başkent Newspaper; Günebakış, September 2026). When cost components are broken down, the upward trend in material and labor indices is squeezing contractors’ profit margins and emerging as the primary risk factor slowing down the development of new projects.

Statements of sector representatives point to a structural problem beyond the index. Mustafa Karslıoğlu, President of the Eastern Mediterranean Construction Contractor Associations Federation (DAİMFED), called the Competition Authority into action, mentioning a “cartel” structure that creates price uncertainty in the ready-mixed concrete market (Hürriyet, 2026); MİMDER, on the other hand, emphasized that excavation dumping fees, reaching 5-25 million TL in large projects, are directly reflected in the sales price (Yeni Mesaj, August 2026). From a risk management perspective, this finding is critical: Competitive vulnerability in the input supply chain creates systematic bias in cost estimates and invalidates feasibility assumptions.

Table 1: Türkiye Construction Cost Index – Annual Increase Rates

Table 1: Türkiye Construction Cost Index – Annual Increase Rates. Source: Adapted from data by TUIK/Günebakış, the TUIK Data Portal, and TUIK/Başkent Gazetesi.

3. Price Gap and Financing Challenges

This rise in costs is reflected in final sales prices with a lag and only partially. According to CBRT data for July 2026, the Housing Price Index (HPI, 2023=100) rose by 1.5% monthly to reach 234.8; while the annual nominal increase was 25.0%, the real change—adjusted for consumer inflation—showed a decline of 5.1%. Consequently, housing prices have experienced a real-term loss in 28 of the last 29 months (CBRT HPI July 2026/Habertürk). Annual CPI was reported at 31.75% for the same month, and at 31.51% in August 2026 (TUIK CPI August 2026/BirGün).

Chart 1: Comparison of annual changes in the construction cost index, material and labor indices, housing price index, new tenant rent index, and CPI for July 2026. The compilation method and rationale are explained in Section 8.

The situation can be summarized in a single sentence: Costs (28.33%) > Housing prices (25.0%) < Inflation (31.75%). Developers are unable to pass input costs on to prices, while buyers cannot purchase homes—which have become more expensive in nominal terms—even as they become cheaper in real terms. As Dr. Ahmet Büyükduman, Managing Partner of Istanbul Real Estate Valuation (İGD), has noted, construction costs outpacing price changes leads to shrinking profit margins, the expected result of which is a decline in new construction starts (Hürriyet Bigpara, June 2026). The same report highlights that in KONUTDER’s first Housing Sector Expectations Survey of 2026, the proportion of developers anticipating price increases rose from 72% to 83.3%, indicating that the sector hopes to close this gap through future price hikes. This expectation represents a strategic risk that warrants the board of directors’ attention regarding the risk of purchase deferral. The affordability limit reached by prices has given rise to two distinct profiles within the realm of consumer finance.

3.1. Cash Buyers: Deposit Return and Earthquake Risk Dilemma

The decision-making mechanism for buyers who have the capacity to purchase the house entirely with equity has changed radically. Capital owners compare the high TL deposit return with the appreciation of real estate and tend to stay in cash. The fact that the CBRT kept the policy rate constant at 37% at the meeting of July 23, 2026 is the main factor that keeps the investors in cash in an environment where the deposit return on housing decreased by 5.1% in real terms (CBRT MPC Decision, July 23, 2026). TUIK data confirms this behavior: In July 2026, non-mortgage (“other”) housing sales decreased by 23.1% annually, falling to 99,715 (TUIK Housing Sales Statistics July 2026/Yatirimx).

On the other hand, earthquake risk is the primary driver for consumers looking to purchase their first home for personal residence or seeking to move into a safer property. This segment is gravitating toward new buildings that comply with earthquake regulations, even at the cost of foregoing potential returns from alternative investments. Under the “Yarısı Bizden” (Half is on Us) campaign conducted by the Ministry of Environment, Urbanization and Climate Change in Istanbul, 435,683 independent units have been included in the urban transformation scope, with the transformation of 108,881 units completed; the campaign has been extended until December 31, 2027, providing a grant of 875,000 TL, a loan of 875,000 TL, and relocation assistance of 125,000 TL per housing unit (Haber Aktüel, September 2026). This public support reduces the opportunity cost—for cash buyers—of choosing “new and safe housing” over “deposit returns,” thereby sustaining earthquake-driven demand.

3.2. Borrowers: Housing Finance in a High-Interest-Rate Environment

For consumers unable to make outright cash purchases, the use of housing loans has contracted significantly due to high interest rates. As of early September 2026, with market-average housing loan interest rates at 2.96% per month (approximately 42% annually compounded), the monthly installment on a 120-month loan amounts to roughly 3% of the loan principal (Hesap.com, August 28, 2026; HangiKredi, September 2, 2026). Nevertheless, an interesting divergence is observed: while total housing sales fell by 17% year-on-year to 123,603 in July 2026, mortgage-backed sales rose by 23.7% to 23,888, pushing the share of mortgage-backed sales within the total to 19.3%. In the January–July period, mortgage-backed sales increased by 30.9%, reaching 166,682 (TUIK/Yatırımx, August 2026). This data indicates that in a market where cash buyers have withdrawn, demand has shifted toward the credit channel—albeit from a low base—and that bank lending policies have become the primary determinant of housing demand.

Chart 2: Year-on-year change in total, mortgage-financed, other, new, and existing housing sales in July 2026. The compilation method and rationale are explained in Section 8.

Shrinking financing channels are shifting the middle class’s housing needs toward the rental market, triggering a chain reaction that fuels rental inflation. The New Tenant Rent Index (YKKE) published by the CBRT showed a 28.4% year-on-year nominal increase in July 2026; in Istanbul, this rate reached 32.4%, surpassing consumer inflation (CBRT YKKE July 2026/Sabah). The fact that the “housing, water, electricity, gas, and other fuels” group within the CPI basket stood at 39.77% year-on-year in August 2026—significantly above general inflation—highlights the substantial weight of housing costs in household budgets (TUIK CPI August 2026/Son Havadis). The heavy burden of essential expenses—particularly housing, food, and transportation—on household budgets limits the savings capacity available for home ownership. According to TUIK’s 2025 Household Budget Survey, housing and rent, food, and transportation expenses account for 76.5% of total consumption expenditure for the lowest-income 20% of households. Persistent high price increases in these essential expenditure categories throughout 2026 indicate that pressure on households’ housing purchasing power remains high. For construction companies, the primary risk lies in the inability to clear built inventory due to financing constraints and the depletion of cash flow by the costs associated with carrying that inventory.

Table 2: Housing Price and Financing Indicators (July–September 2026)

Table 2: Housing Price and Financing Indicators (July–September 2026). Adapted from data by CBRT/Habertürk, CBRT/Ekonomi Ankara, CBRT/Sabah, TUIK/Birgün, CBRT/MPC, Hesap.com, and TUIK/Yatırımx.

4. Housing Diversity and Segmentation Effects

The construction sector does not offer a uniform product; cost increases have varying impacts across different segments.

• Luxury Residences and Hotels: In this segment, which caters to the A and A+ income groups, cost increases are relatively easily passed on to prices because buyers can make payments in cash or via foreign currency-indexed arrangements. However, this segment is not immune to market dynamics: while residential sales to foreigners rose by 1.9% year-on-year to 2,120 units in July 2026, the total for the January–July period fell by 7.3% to 11,203 units; the largest buyer groups were citizens of Russia, Iran, and Ukraine (TUIK/Gayrimenkul Haber, August 2026). This demand, directly influenced by geopolitical fluctuations, necessitates the simultaneous management of exchange rate and collection risks in foreign currency-indexed projects. Meanwhile, hotel investments by institutional investors are amortized through tourism revenues.
• Social Housing: Developer profit margins in this segment—aimed at low-income groups—are at their lowest; rising iron and concrete prices have rendered social housing unattractive to the private sector, leaving the initiative largely to the public sector. Stepping in to fill this gap, TOKİ received 8,840,314 applications for 500,000 social housing units across 81 provinces—part of the “Housing Project of the Century”—with 5,242,766 of these deemed valid. The units are being sold with a 10% down payment and a 240-month repayment term; outside Istanbul, the price for a 55 m² 1+1 unit is 1.8 million TL, with installments starting at 6,750 TL, and initial handovers scheduled for March 2027. Additionally, a model involving 15,000 social housing units for rent will be implemented in Istanbul for the first time (Ministry of Environment, Urbanization and Climate Change; TOKİ, April 2026). The 5.2 million valid applications for 500,000 units (approximately 10 applications per unit) quantitatively document the scale of demand that cannot be met at market prices.
• Summer Homes, Winter Homes, and Commercial Spaces: Demand for holiday homes—classified as secondary residences—is the first expenditure to be postponed during periods of financial contraction. However, holiday homes are experiencing a partial rise in demand as a result of the shift toward remote work. Meanwhile, investments in commercial properties are undergoing a distinct transformation driven by the proliferation of e-commerce and remote work. The Antalya Trade Platform’s observation of a striking increase in the number of hotels listed for sale and vacant commercial units indicates that high financing costs have spilled over into the tourism and commercial real estate sectors (Forbes Turkey, July 2026).

5. Impacts on Income Distribution

• The transformation of housing from a basic shelter need into a vehicle for wealth accumulation and a hedge against inflation is deepening income and wealth inequality. While the upper-income group—possessing access to capital—grows its wealth through the appreciation of its properties, lower- and middle-income groups are pushed out of the system and trapped in a cycle of permanent tenancy due to high borrowing costs, which prevent them from accessing financing. According to TUIK’s 2025 Income Distribution Statistics, the Gini coefficient stands at 0.410; the highest-income 20% of the population receives a 48.0% share of total income, whereas the lowest 20% receives 6.4%. The P90/P10 ratio, which measures the income disparity between the wealthiest 10% and the poorest 10%, is 12.9 (TUIK Income Distribution Statistics 2025 / Sözcü; TUIK Bulletin). In this context, the fact that mortgage installments exceed the income of the lowest 20% income bracket leads to unequal access to housing based on income group.
• The problem is global. According to UN-Habitat’s *World Cities Report 2026*, the global housing price-to-household income ratio rose from 9.3 in 2010 to 11.2 in 2023; meanwhile, public capital investment in housing across OECD countries declined from 0.17% of Gross Domestic Product (GDP) in 2001 to 0.06% in 2018 (UN-Habitat *World Cities Report 2026*, Chapter 3). Based on the same dataset, the annual income multiple required for a household to purchase a median-priced home is 34.6 in China, 12.6 in Portugal, 11.8 in France, 10.7 in Germany, 9.4 in Canada, and 4.5 in the USA (Visual Capitalist/UN-Habitat, July 2026). In any economy where public housing investment is withdrawn and demand is left to the market, the result is the same: the price-to-income gap widens, and renting becomes the permanent norm. Türkiye’s TOKİ initiative should be viewed as a public intervention against this global trend.

Table 3: Housing Price-to-Household Income Ratio – International Comparison

Table 3: Housing Price and Financing Indicators (July–September 2026). Source: Adapted from UN-Habitat World Cities Report 2026/Visual Capitalist data.

6. Global and Local Case Studies

6.1. Global Case: The China Evergrande Crisis and Its Aftermath

The most striking example of the consequences of excessive leverage and a lack of oversight in the construction sector is the crisis involving the China-based Evergrande Group. The company defaulted in 2021, a Hong Kong court ordered its liquidation in January 2024, and it failed to meet liabilities exceeding $300 billion (RFA, February 2024). The company’s shares were delisted from the Hong Kong Stock Exchange in August 2025, and its founder, Hui Ka Yan, was sentenced to life imprisonment on August 20, 2026, for crimes involving the misappropriation of funds and bribery (Bloomberg, August 20, 2026; Reuters analysis/Taipei Times, August 2026).

The main reason for the crisis is that the company based its growth entirely on debt financing and lost the opportunity to refinance with the Chinese government’s “three red lines” regulation that limits developers’ borrowing limits. The crisis is not limited to a single company: Country Garden defaulted in 2023 and has not purchased land since then; There were defaults exceeding 130 billion dollars in total in the sector; Publicly affiliated Vanke announced a record annual loss of 89 billion yuan ($13 billion) in 2025 (SCMP, December 2025; Bloomberg, August 2026). Second-hand housing prices in small cities have dropped to about a quarter below the 2020 level; The fact that more than a third of the population uses second homes as an investment tool has made the problem of “more houses than there are households” structural (Reuters/Taipei Times, August 2026).

Evergrande represents a combination of (i) a cyclical cash model that finances new land acquisitions with pre-sale proceeds, (ii) weaknesses in independent auditing and internal controls, and (iii) a failure to conduct scenario analyses regarding regulatory changes. The “off-plan sales” and “revenue-sharing/land-for-construction” models in Türkiye carry this same cash-cycle risk, albeit on a smaller scale; therefore, monitoring project-based cash flows and holding pre-sale proceeds in segregated accounts should be a priority item in internal audit plans.

6.2. Global Case Study: Germany – Interest Rate and Cost Shocks Bringing the Construction Sector to a Halt

The German example serves as the most recent real-world case study illustrating the consequences of the “cost plus interest rate” dual shock—similar to the one experienced by Türkiye—within an advanced economy. Between 2021 and 2024, mortgage interest rates rose from 1.3% to over 4%, construction costs increased by more than 30%, and building permits declined by 27% in 2023 (Bluebeam, October 2025). The total number of permits issued fell by 43% during the 2021–2024 period; while the annual housing requirement stood at 320,000 units, the number of completed homes dropped to 251,000, and the backlog of unrealized projects reached 760,000 units (VAV Synergy, November 2025). Europe’s largest construction sector contracted by more than 10% between 2020 and 2025 (ING Think, September 2026).

The macroeconomic cost has become quantifiable: According to the Pestel Institute’s *Construction Monitor 2026* study, 84,600 fewer housing units were built in 2025 compared to 2023; this shortfall resulted in a revenue loss of €26.9 billion ($31.4 billion) over the two-year period and dragged down GDP growth by 0.6 percentage points (Yahoo Finance, August 2026). Corporate insolvencies rose by 24.9% year-on-year in the first half of 2024 (Destatis/ResearchAndMarkets, January 2025). A recovery is only beginning in 2026, with modest growth of around 1%; the government is intervening with an accelerated permitting program dubbed “Bau-Turbo” and an €11 billion social housing fund.

The German case, unlike Türkiye, occurred in an environment where inflation was low; Despite this, the result is the same: When costs and interest rise at the same time, projects whose feasibility deteriorates are suspended, the supply gap widens and the price/income gap widens further in a new cycle. This shows why it is not a “good practice” but an existential necessity for construction companies to stress test interest and input price scenarios together. We better understand the importance of performing stress tests, scenario analyses, and forecast modeling in the real sector as well as in the financial sector.

6.3. The Case of Türkiye: Post-Disaster Reconstruction, Urban Transformation, and the Wave of Concordat Filings

The painful urban transformation processes experienced in Türkiye—exemplified by the Fikirtepe case—and the “disaster-focused reconstruction” era that began following the February 6, 2023 earthquakes have served as two major arenas testing the sector’s risk management capacity. Companies developing projects under “land-for-construction” agreements faced the risk of project abandonment because they failed to anticipate the rise in iron and cement costs. State-involved transformation projects and subsidized urban transformation loans provided through banks acted as lifelines preventing the system’s collapse; however, the inability to predict costs highlights a structural weakness in cash flow management.

Current data indicate that this vulnerability is reflected in balance sheets. In the first seven months of 2026, courts issued 3,529 rulings regarding *konkordato* (debt restructuring/composition) cases; the construction sector accounts for the highest number of firms and individuals involved in this process, totaling 564. The number of bankruptcy rulings issued during the first seven months rose from 55 in 2024 and 126 in 2025 to 171 in 2026 (Bursa Saati/Konkordatotakip, August 2026). From 2018 through January 2026, the construction sector remained the highest-risk industry for *konkordato* filings, involving 517 firms (T24, February 2026). The combination of long project durations, delays in collecting progress payments, and volatility in material prices is translating into cash flow problems for contractors’ balance sheets; meanwhile, consumers who purchased housing “off-plan” from firms entering *konkordato* proceedings are suffering direct financial losses (Emlak Kulisi, September 2026).

In response, the public sector is expanding its role as an intermediary financing the transformation. The “Half from Us” (*Yarısı Bizden*) model is being extended to all 81 provinces with the aim of renewing 150,000 independent units annually (Haber Aktüel, September 2026); the 2026 Presidential Annual Program prioritizes the renewal of the risky building stock in preparation for a potential Marmara earthquake, and new reserve development areas are being designated across 77 provinces (Anadolu Agency).

While state-supported transformation reduces demand risk for contractors, it increases compliance risk regarding progress payments, grants, and loan processes; since the Ministry leaves the choice of firm to the citizens, companies capable of demonstrating technical and financial competence and maintaining auditable processes will gain a competitive advantage.

7. The Teolupus Perspective: Enterprise Risk Management and Internal Audit in Construction

Given the cost fluctuations, financing crises, and revenue distribution dynamics to which the sector is exposed, the survival of construction companies depends on a robust Enterprise Risk Management (ERM) architecture. In the Teolupus internal audit consulting approach, internal audit is defined as an independent assurance and consulting activity that helps the organization achieve its objectives by systematically evaluating the effectiveness of risk management, control, and governance processes. There are five areas within the construction sector upon which this assurance must focus:

• Cost and feasibility risks: Project-based stress testing using TUIK cost indices and CBRT interest rate scenarios; automated alert mechanisms triggered by cost increase thresholds.
• Cash flow and pre-sales risk: Segregation of pre-construction sales revenue within project accounts, matching of progress payments with collections, and monitoring of subcontractor payment discipline via ERP systems.
• Procurement and purchasing irregularities: Price variance analysis and data analytics-driven continuous auditing for high-value items such as concrete, rebar, and excavation services; full population analysis—as highlighted in Teolupus publications—rather than merely selecting and examining 25 records from a dataset of 40,000 procurement entries.
• Regulatory compliance: Compliance advisory services covering Law No. 6306, the terms of the “Yarısı Bizden” (Half is on Us) grant/loan scheme, KVKK (Personal Data Protection Law), and tax obligations.
• Management reporting: An operational and financial reporting infrastructure enabling the board of directors to monitor project profitability, inventory turnover rates, and reliance on credit facilities on a monthly basis.

In a project conducted by Teolupus using a co-sourcing model, a risk-based annual internal audit plan was jointly developed, joint audits were carried out across finance, supply chain, and information technology processes, and findings were successfully translated into actionable measures (Teolupus Success Story: Joining Forces in Risk Management and Internal Audit through the Co-Sourcing Model). A similar sectoral approach has been applied to projects in the energy and ship management sectors; furthermore, for SME-scale contractors in the construction industry, internal control and internal audit are considered the initial steps toward institutionalization.

8. Methods of Creation of Data Sets (Tables and Graphs)

The tables and graphs in this article were compiled from TUIK, CBRT, Ministry of Environment, Urbanization and Climate Change / TOKİ, UN-Habitat and Destatis / Pestel open data in order to put the conceptual framework of the subject on a numerical basis. No data is the product of guesswork, extrapolation or modelling.

Table 1 (Construction Cost Index): TUIK’s annual rate-of-change figures for the 2024–2026 period were selected to substantiate the article’s central argument regarding “cost pressure.” The comparison across July 2024, July 2025, and July 2026 utilized data from the same month specifically to neutralize seasonal effects, while a breakdown of material versus labor costs was included to illustrate the source of the cost pressure.

Table 2 (Price and Financing Indicators): The quarterly House Price Index (HPI) series has been distilled into a single figure (a real change of -5.1%); by presenting data on prices, rents, inflation, interest rates, and loans for the same period in a single view, the table enables a comprehensive reading of all components of the “gap” (or spread).

Table 3 (International Price-to-Income Ratio): To support the claim made in the income distribution section that “the problem is global,” seven countries—including China and Germany, which are examined as case studies in the article—were selected from the UN-Habitat 2026 dataset.

Chart 1 (Cost–Price–Inflation Gap, July 2026): Displays the year-on-year changes for July 2026 across the TUIK Construction Cost Index (total, material, labor), CBRT Housing Price Index, CBRT New Tenant Rent Index, and TUIK CPI; the red dashed line indicates the CPI level. The same month was selected to ensure the data from different institutions are comparable. The data in the chart were manually entered based on the sources cited in the article (sources: Tables 1 and 2).

Chart 2 (Divergence in Housing Sales Financing Channels, July 2026): Shows the year-on-year changes in total, mortgaged, “other,” new, and existing housing sales based on TUIK statistics for July 2026; increases are marked in green, and decreases in red.

9. Frequently Asked Questions (FAQ)

Why is the gap between costs and prices widening in the construction sector?

Since material and labor costs (rising at an annual rate of 28.33% as of July 2026) are increasing faster than residential sales prices (25.0%), and demand has weakened due to high interest rates (making it more attractive to earn money from capital than to invest in housing) and declining purchasing power, producers are unable to pass costs on to prices, resulting in shrinking profit margins.

How does a high-interest-rate environment affect real estate investors?

In an environment where the policy rate is 37%, investors with cash tend to favor bank deposits; as housing prices decline in real terms, the role of real estate as a hedge against inflation diminishes. Meanwhile, buyers relying on financing can only access limited loan amounts at monthly interest rates of approximately 3%.

Did housing prices actually fall in 2026?

In nominal terms, no; in real terms, yes. According to CBRT data, housing prices rose by 25% year-on-year in July 2026; however, when adjusted for the 31.75% inflation rate, they declined by 5.1%, marking a real-term drop in 28 of the last 29 months.

How will the TOKİ 500,000-unit social housing project affect the housing market?

The 5.2 million valid applications indicate that the public sector is stepping in to meet demand from lower-middle-income groups that the market cannot satisfy at prevailing prices. While the project increases supply in the social housing segment—which the private sector has largely abandoned—it could also curb demand for lower-end existing homes and limit rent increases in the medium term.

What is the key risk management lesson to be learned from the Evergrande and German cases?

Evergrande demonstrates that excessive leverage and opaque cash flows can drive a conglomerate toward liquidation, while the German case shows that even in a low-inflation economy, a simultaneous rise in interest rates and costs can cause the sector to contract by 10%. The shared lesson is the necessity of subjecting interest rate and input cost scenarios to joint stress testing and reporting the findings to the board of directors in a timely manner.

What services does Teolupus offer for the construction industry?

Project-based enterprise risk management (ERM) framework, internal audit focusing on cost and progress controls, subcontractor and procurement audits, regulatory compliance and financial reporting consultancy for the board of directors. You can visit our contact page for detailed information.

10. References

1. TUIK. (2026). Construction Cost Index – July 2026. Cited by: Başkent Newspaper. https://www.baskentgazete.com.tr/insaat-maliyet-endeksi-yillik-yuzde-2833-artti
2. TUIK (2026). Construction Cost Index – Comparison of July 2024/2025/June 2026. Cited by: Günebakış. https://www.bakishaber.com/haber/28668046/tuik-acikladi-insaat-maliyetlerinde-dikkat-ceken-degisim
3. TUIK. (2026). Construction Cost Index – December 2025. https://veriportali.tuik.gov.tr/tr/press/53892/metadata
4. CBRT. (2026). Residential Property Price Index and New Tenant Rent Index – July 2026. Cited by: Habertürk. https://www.haberturk.com/ekonomi/konut-fiyatlarinda-reeel-dusus-suruyor-3906378
5. CBRT. (2026). New Tenant Rent Index – July 2026. Cited by: Sabah. https://www.sabah.com.tr/ekonomi/tcmb-acikladi-konut-fiyatlarinda-reel-dusus-kiralar-ne-kadar-oldu-7643692
6. CBRT. (2026). Press Release on Interest Rates, July 23, 2026 https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/PPK/PPK+Toplanti+Kararlari
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9. TUIK. (2025). Income Distribution Statistics 2025 https://data.tuik.gov.tr/Bulten/Index?p=Gelir-Dagilimi-Istatistikleri-2025-53993 (Source: Sözcü, December 26, 2025)
10. Hesap.com. (2026). Housing loan interest rates, August 28, 2026. https://hesap.com/kredi/konut-kredisi; HangiKredi, September 2, 2026 https://www.hangikredi.com/kredi/konut-kredisi
11. Ministry of Environment, Urbanization and Climate Change. (2025). Türkiye Becomes a Nation of Homeowners with 500,000 Social Housing Units. https://csb.gov.tr/500-bin-sosyal-konut-ile-ev-sahibi-turkiye-bakanlik-faaliyetleri-42879
12. TOKİ. (2026). Beneficiaries determined for the “Housing Project of the Century.” https://www.toki.gov.tr/haber/yuzyilin-konut-projesinde-hak-sahipleri-belirlendi
13. Haber Aktüel. (2026). Urban Transformation Campaign Period Extended (“Half is on Us”). https://www.haberaktuel.com/kentsel-donusum-kampanyasi-suresi-uzatildi-3487145
14. Anadolu Agency. (2025). New reserve building areas designated in 77 provinces for urban transformation projects. https://www.aa.com.tr/tr/gundem/kentsel-donusum-calismalari-icin-77-ilde-yeni-rezerv-yapi-alanlari-belirlendi/3730592
15. Hürriyet Bigpara. (2026). Housing price increases have lagged behind costs (KONUTDER survey; Dr. Ahmet Büyükduman, İGD) https://bigpara.hurriyet.com.tr/haberler/ekonomi-haberleri/konutta-fiyat-artisi-maliyetin-gerisinde-kaldi_ID102197298/
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25. South China Morning Post. (2025). China Vanke wins bondholders’ reprieve, averts default for now. https://www.scmp.com/business/china-business/article/3337405/china-vanke-wins-bondholders-reprieve-averts-default-now
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28. ING Think. (2026). German construction is turning the corner, but slowly. https://think.ing.com/articles/german-construction-is-turning-the-corner-but-slowly
29. Bluebeam. (2025). Lessons from Germany’s Construction Crash. https://blog.bluebeam.com/germany-construction-crash-lessons/
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34. Teolupus. Enterprise Risk Management Consulting.. https://teolupus.com/kurumsal-risk-yonetimi/; Internal Audit Consulting https://teolupus.com/ic-denetim/; Joining Forces in Risk Management and Internal Audit via the Co-sourcing Model.. https://teolupus.com/es-kaynak-modeli-risk-yonetimi/; Publications. https://teolupus.com/blog/