Risk Analysis of the Government's Cheap Housing Project

I am going to make you a proposition and I am a very trustworthy person. 

My offer is as follows: 

You will give five hundred liras in exchange for participating in a lottery, and if you don't win the lottery, I guarantee that you will get your five hundred liras back with interest. 

The winners of the lottery will be able to own an apartment at lower and more affordable prices than the market.

Yes, this is something that the government has come up with and used a lot as propaganda. Every day, on every channel, they keep saying how many applications have been made. 

Let's analyze the risks of this proposal together:

1) If the participants in the lottery do not get an apartment, they will get back the five hundred liras they invested with interest. What if I don't keep this promise? What if I don't pay back the five hundred liras? Can we accept this as a risk? It can be. I can be deceived in such a matter, but if the state makes this promise, I think you can imagine that such a risk is very low. In that case, if you have five hundred lire, it is worth a try and you can participate in the lottery with peace of mind.

2) Let's say you win a flat in the lottery. You will be able to own an apartment at a much more affordable price than the market prices. Is there a risk in this? What if the flats are not sold at a more affordable price than the market, as they say? Look, this is indeed a risk. I would want to see a payment plan from the beginning. After all, it's a bit more serious now. It is registered that you are in debt in some way. If you can't afford to pay, it might make more sense not to go on such an adventure in the first place. 

3) Could something like this happen? I mean, can you dream of owning an apartment at a lower cost than the market as promised, only to end up owning an apartment at a much higher cost? Yes, it can happen. That's what happened in the mortgage crisis in America. Even though homeowners owed money to the banks, the values of the houses they owned had fallen so much that they stopped paying their loans and handed the houses over to the banks, and this led to a nationwide crisis. Can this happen in our country, maybe it can. As I said, we need to see the payment plan from the beginning, but unfortunately there is no payment plan yet. 

4) Well, let's say that we don't have such a thing, after all, the inflation rate is very high and every payment we make will be an advantage for us, that is, we will be able to own an apartment much cheaper than the market value. In fact, since this project is being developed by the state, promises can actually be kept and it may be possible to have a cheaper apartment. 

But what other risks might there be in this situation? 

For example, what will happen if the flats cannot be completed on the promised dates?  

This is a really serious risk. Considering that TOKİ has had such problems in the past, this risk really needs to be taken into account. 

Nevertheless, if desired, the projects can be completed on time with state support. If the contractors are given the necessary guarantees that they will be paid for their work, work can be prevented from stopping due to cost reasons. Of course, in this case, the state would have to cover the cost difference from a separate source. 

5) For now, since this is an electoral move, the state will have no problem allocating such resources. 

But tomorrow? What will happen after the elections are over? What will happen when the horse has crossed Üsküdar? 

Will the state be able to say, what can we do, these costs are not justified?

In my opinion, this issue may change depending on who is in charge of the state after the elections. If there is a mercurial government, it may act in whatever way suits it at the time. 

I think this is the biggest risk of this issue. If a decision is taken to take the cost difference out of the flat owners, then the flats may not be finished at prices lower than the market price as promised from the beginning.

6) If the opposition comes to power after the elections, is there a risk that the construction of the apartments will be stopped? 

This is actually the same as the previous point. How much we trust whoever is in power is a very relevant question. If the project is just an election propaganda and the costs are problematic for the realization of the project, everything can be reconsidered. The conditions can be rearranged. But as they say, every man has his own way of eating yogurt, and continuity is essential in the state. I believe that the project will continue, even if the construction method is changed, even if the payment terms are slightly altered. Maybe even more advantageous payment conditions can be created by the new administration if the leakages are prevented. 

In other words, maybe this risk is not a risk, maybe a more advantageous solution can be found by the new administration. 

Everything is actually very much related to the economic policies of the new administration. If it is possible to prevent the current economic crisis, these projects can be continued under much more favorable conditions.

7) How appropriate are the locations of these projects? Is this a risk?

Yes, that's another issue. Actually, every city should have a development plan. This should be a fifty-year plan, a hundred-year plan, not just from today to tomorrow. New settlements should be built according to this plan.

At the moment, the new settlements selected under this project seem to have been chosen far outside the cities.

I cannot say that the current government is acting in accordance with a specific plan when it comes to urban planning. Therefore, I can't say that I don't have reservations about how planned these selected locations are.

From this point of view, I really don't know how sensible it would be to invest everything we have in such an investment. I wish we had a little more knowledge about the development of cities so that we could make an assessment accordingly.

Our question is, is it a risk? Yes, I think it can be a risk.

But sometimes a brand new settlement can be very valuable tomorrow. I cannot say anything without seeing the new settlement plan.

I just remembered the house we bought for my brother in Bursa years ago, the location of the house was quite far outside of Bursa, in a place where everything was under construction at that time. My brother didn't really like it at first. But as soon as I saw it, I said that this place would be the new center of Bursa tomorrow and I convinced my brother.

Yes, I am talking about Fatih Sultan Mehmet Boulevard in Bursa. Those who know this place will understand what I mean.

So this is also a risk, but sometimes it can be an advantage.

To summarize:

- There doesn't seem to be a problem in participating in the Qur'an, and this is the opinion of the majority, which is why there is so much participation. But such a large turnout should not be perceived as support for the government. Perhaps on the contrary, it is an indication of how desperate the government has made society. People are at a loss as to how to secure their future in this economic downturn. That is why there are masses of applications to take advantage of even the slightest advantage. Just like thousands of people applying for three vacancies. This is actually a problem, it means that thousands of people are unemployed, three positions are not very special positions! Maybe not very advantageous positions either.

- There are risks to this investment, but the advantages are not negligible. The real risks are that if you are lucky enough to get a flat in the lottery, it may affect you more. That is why it is important to think carefully before signing the final signature.

- The project will continue even if the government changes, I think the risk in this regard is much less compared to the other risks of the project.

- Will the projects be completed? This will depend on the conditions of the day.

I think what is more important is whether you have the ability to pay. If you have a problem with payment, as I said above, it is useful to think well before signing the final signature.

At the end of the day, there is also the possibility of being a bit of a mess at the end of the day.

This is how I see this project. I hope I have been useful to you as a civil engineer.

Love and respect to everyone from Moscow