Real Estate Index Report – Turkey 2022
Turkey’s residential property price index rose by 96.4% in February
Turkey’s residential property price index rose by 96.4 percent in February and 110% in real terms, according to the latest figures released by the country’s housing ministry. The index measures changes in the price of dwellings based on quality-adjusted factors. The index is made up of the prices of existing dwellings and newly constructed homes. In Istanbul, for example, the price of a one-bedroom apartment increased by 15.6% and a three-bedroom apartment increased by 13.4%. The increase in prices follows a sharp drop in the lira’s value, which fell by 44% against the dollar in late 2021. This led to a surge in inflation related to imports.
Despite the recent rise in property prices, Turkey’s economy is currently facing a serious crisis. The Turkish lira has plummeted in the past year, and housing prices in the country are rising despite a lack of supply. Several factors have contributed to this increase. Inflation, an imbalance between supply and demand, increasing construction costs, and the ongoing Russian war in Ukraine have all impacted Turkey’s real estate prices.
Home sales rose by 11.5% y-o-y to 265,098 units in 2020
Home sales to foreign nationals in Turkey rose by 43.5 percent y-o-y in 2020, with Istanbul taking the lead, with 26,469 sales. Other major cities with high foreign home sales include Ankara and Antalya. Iranians are the largest foreign group, buying 11,500 housing units in 2020, followed by Iraqis and Russians. Germans purchased 2,762 units, while a few others bought just over a quarter of a year ago.
In the fourth quarter of 2018, Turkey’s home sales increased by 21.5% y-o-y, driven by strong sales from foreign nationals. The country’s central bank has cut rates twice, bringing real yields to negative territory. This has encouraged locals to invest in real estate as a protection against inflation and rising prices. Despite rising prices, Turkey has a low supply of homes, and the decline in supply has led to high prices.
Housing stock ratio is slightly higher than last year
The first quarter of 2022 showed a slightly higher housing stock ratio than last year, but demand for Turkish real estate is expected to remain strong in the coming years. This is due to the interest from local buyers as well as overseas clients. The golden visa program, which offers Turkish citizenship through property purchases, is also expected to increase demand. Furthermore, residential property is perceived as a safe investment. It is worth mentioning that the Turkish lira is pegged to the U.S. dollar, and thus house prices and real estate prices are unofficially tied to the U.S. dollar.
House prices in Turkey have risen rapidly since the beginning of the pandemic. In fact, nominal growth reached 110% in the year to March, according to the latest figures published by Knight Frank. The rate of growth was even higher in Istanbul.
Shortage of supply is a key factor in property prices
Shortage of supply is one of the major factors that drive up property prices in Turkey. As the population continues to grow, the housing supply is not keeping up with demand. This has increased prices for new-build properties. As a result, residents are struggling to find affordable homes. Construction permits are also in short supply, and builders are facing rising costs of inputs.
As a result, housing prices in Turkey are soaring. Many of these increases are the result of panic buying and selling. People are moving out of their existing homes in order to buy new ones. Therefore, they are willing to pay higher prices. Moreover, rising inflation rates create additional demand for homes.
Investment opportunities in Turkey’s real estate market
The real estate market of Turkey is experiencing a boom. Due to its strategic location, rich cultural heritage, and geographical diversity, investment in Turkey’s real estate is increasing every year. This market also offers investors up to 150% returns. The demand for homes in the country is constantly increasing, with over one million people moving to the country every year. Real estate investment in Turkey has become increasingly popular with foreign investors.
While buying a property in Turkey, it is essential to consider your budget. Most real estate companies in Turkey will help prospective buyers arrange mortgages. The mortgage period is five years, and the down payment is usually 30 to 35 percent of the property’s value. You may also take out a loan from your home country, but if the interest rates are high, this may not be a good idea. In such cases, you should consider getting a mortgage from a Turkish bank.