EMRE DELİVELİ - Why economists are not surprised by the graft scandal:
"Of course, they are surprised. Even though I was expecting some kind of retaliation, I would not have dreamed of such a wide-scale operation. But most Turkey economists are probably not shocked that construction projects are part of the investigation.
Even a first-time visitor to Istanbul would notice right away that the whole city looks like one huge construction site. Interestingly, I have some difficulty explaining this real estate boom to foreign economists, who point out that home prices have not risen as much as in other countries that went through bubbles, or that the share of construction in GDP is lower than in many peers.
Prices have been held relatively at bay by the astonishing rise in supply, which has been financed by a Ponzi-like scheme: Construction companies start a new project before they sell a significant part of their completed ones. They finance this spree by borrowing from banks, which get extra business by lending to homebuyers. "
'via Blog this'
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