According to the Central Bank of the Republic of Turkey (CBRT) House Price Index, house prices broke their record in February with an annual increase of 96.4 percent. According to research by BETAM and sahibinden.com, the increase in rents in Istanbul and Ankara exceeded 100 percent, while the increase in ad prices was 84 percent. Industry officials said they could not stop the price hike and that despite the fact that home prices and rents have risen by at least 100 percent over the past 6 months, demand has not fallen.
BEING AT HOME HAS GONE THREE TIMES QUICKLY
Speaking to BBC Turkish, All Real Estate Consultants Federation (TEMFED) President Hacı Ali Taylan said: “The dollar/TL rate has risen by 80 percent since September, but property price increases have risen almost twice as much. In other words, home prices have outperformed the dollar for the first time in history. I haven’t seen anything in my 40 years of industrial life,” he said.
Kerim Rota, head of Economic Policy of the Party of the Future, said that according to Central Bank Housing Index data, the duration of buying a house in Turkey increased by “8 years” in the last 2.5 years compared to 2010.
WHY ARE HOUSE PRICES AND RENTS RISING?
The increase in costs experienced in recent years not only increases the prices of newly built houses, but also leads to a decrease in housing production, which leads to a decrease in supply and an increase in the prices of existing houses. Industry representatives, on the other hand, note that despite all these price increases, there is no drop in demand for housing; on the contrary, there is not enough housing stock in view of serious demand.
However, according to industry representatives, the only reason for the increase in house sales and rental prices is not the increased foreign currency costs in the construction sector. It turns out that distrust of the Turkish lira has made real estate an investment vehicle again and investors are intensively looking to convert their money into real estate.
“CONSTRUCTION COSTS MUST BE DETERMINED”
Real estate ownership in Turkey is 65-67 percent. 33 percent still do not own a home. Experts emphasize that the increase in the price of new housing also has an impact on the sale and rent of second-hand housing. It notes that construction costs, already at an all-time high at 90.27 percent annually, and supply and demand issues are affecting prices. They explain that the input costs in the construction sector should be fixed in order to avoid high prices.
WILL FOREIGNERS RISE HOME PRICES?
Turkstat reported that 5,567 foreigners were sold in March, up 31 percent from the same month last year. Accordingly, the share of house sales to foreigners in the total house sales in March 2022 was 4.1 percent. The increase in real estate and rental prices is often attributed to the increase in the foreign population in the cities. Istanbul, Antalya and Ankara follow in the top three places for house sales to foreigners.
In September 2018, the cost of buying a home for citizenship was reduced from $1 million to $250,000. However, with a recent decision, the value of real estate to be taken on condition of applying for Turkish citizenship has been increased to $400,000.
According to experts, foreigners have a certain influence on price increases, but this effect is not estimated to be very high. Sector officials said that “only 5,000 to 7,000 of the 100,000 to 150,000 houses sold in a month in Turkey are foreigners,” the industry officials said, “we cannot attribute rent increases in Ankara and Istanbul to foreigners.”
THERE IS A LEGAL VOID
The President of the Consumer Rights Association, Turhan Çakar, noting that there is a legal loophole in the criteria used to determine the rental and sale prices of property owners, says: “There is no regulation that says houses should be rented at this price, the maximum price is that. Therefore, everyone acts according to their own will and increases prices by influencing each other.”
“Residential property prices are not falling, they remain at the highest possible level”
Experts assume that real estate prices cannot fall in the short to medium term and will at best remain stable.
President of Ankara Chamber of Real Estate Agents Hakan Akçam stated that he is concerned that current real estate prices will increase 2-3 times due to the unpredictable situation in construction costs and that he thinks it is “very likely” that if Keep this up, a 100% price increase within a year.
“Prices in the real estate sector remain stable, but are not falling,” said Akçam, adding: “That’s why we urgently demand at this point: It shouldn’t go up, it should go on like this.”
All Real Estate Agents Federation (TEMFED) President Hacı Ali Taylan said: “The market is so unstable that we cannot predict what prices will be like in six months time. But we know these prices will not go down.”
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