Last Updated on 03/06/2023
Since the beginning of 2022, demand in the real estate market in Turkey has remarkably increased. Consequently, this high demand rose the property prices in Turkey as well. Therefore, the unusual price increase made some investors worry about its impact. Others even wonder if it is a good time to invest in Turkey real estate.
In this article, we will state some data and interpret its impact on the future of the real estate market in Turkey.
Are property prices in Turkey increasing?
According to Knight Frank’s Global House Price Index, property prices in Turkey increased significantly, especially in the first half of 2022. This increase has begun with the start of the pandemic. It reached thus the uncommon three-digit threshold with a year-to-year growth of 110% in March. It ranked thus the most of any country. Yet, Istanbul only experienced nominal growth of 122%.
Turkey stands out as the index leader, outpacing the average house price rise rate of 10.2% across 56 nations and territories in the year to March. The numbers are a little more difficult to understand due to the high rate of inflation, but according to Knight Frank data, the real rate of increase in house prices was 30% in the year ending in March, when the consumer price index was at 69.9%.
A stable market despite the increase in Property prices in Turkey
Analysts claim that there is no chance of a housing bubble despite the increasing property prices in Turkey. Rising inflation pushed Turkish nationals to invest in real estate as a hedge against rising prices. Moreover, we have noticed a particular demand for luxury properties being the most requested. According to official data from TurkStat, the country’s Consumer Price Index grew 73.5% year over year in May. These facts mean that even expensive houses are still relatively a good deal.
Why property prices in Turkey increased recently?
An increasing demand rose the property prices in Turkey
Many factors have contributed to the increase in the demand for Turkish properties this year. Consequently, the property prices in Turkey increased as well. In fact, on one hand, local purchasers seek a safe investment against inflation. On the other hand, foreign investors are interested in Turkey’s investment program granting Turkish citizenship. Moreover, the recent Russian invasion of Ukraine and the resulting financial sanctions draw the Russian investors’ attention to the Turkish market.
Experts estimate these factors to keep driving up demand in the Turkish real estate sector. Therefore, the market will certainly continue to be supported for years to come by the enduring demand for Turkish properties, particularly high-end residences.
Turkish Citizenship: An encouraging investment scheme
Last June, The Turkish government increased the investment limit of Turkish citizenship by real estate from US$250,000 to US$400,000. As expected, the rush of interested foreign buyers to purchase before the set deadline increased both house sales and property prices in Turkey. However, after the regulation due date is over, a momentary decline in property sales in Turkey is an estimated consequence. When compared to the same month in 2021, house sales in Turkey decreased by 12.9% in July 2022.
However, if we examine the property sales in Turkey in the first half of 2022, we can confirm a notable rise compared to last year. In fact, from January to July, real estate transactions in Turkey increased by 24.2% compared to the same period in 2021. To clarify, this data proves that despite the increase of the Turkish citizenship investment limit, there is still interest in the plan, particularly from Russians, Iranians, and Iraqis. Moreover, those who are unable to satisfy the new requirement might still buy cheaper houses to obtain a residence permit by real estate.
Check the property sales in Turkey in March, April, May, and June 2022.
A safeguard against inflation
According to experts, real estate sales for both 1st sale and resale properties dramatically expanded because it doesn’t make sense to maintain capital in banks in Turkey, especially with the decreasing interest policy. Therefore, significant inflation pushed investors to look for a substitute. Thus, people purchase properties not to live in but as a profitable investment.
Although Turkish law requires that all property sales be recorded in Turkish lira, property prices in Turkey are unofficially linked to the U.S. dollar. Both developers and buyers, always think in U.S. dollar prices. Therefore, the high inflation on the Turkish lira doesn’t directly affect the price
To conclude, the Real estate market in Turkey is an active sector. Thus, it is wise to interpret the market activities over a long period of time. MEO Consultants experts can provide you with a complete advisory if you are considering investing in Turkey.
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