Recently, after the sudden rise of house prices in Turkey, it was determined that there was a resurgence in real estate values, especially after September 2021. According to officially released data, only 3.9 percent of the total 1.5 million residential sales in Turkey last year were made to foreigners.
While the rate of increase in rental houses in Istanbul was 40%, it increased to over 100% in some central districts. This increase is not only experienced in rental houses, but also in house prices for sale and at prices that are considerably higher than they should be in real estate agents.
Reason for Increase in House Prices and Rents
The cost increase in recent years both increases the prices of newly built houses and causes production to decrease, resulting in reduced demand and increased prices of existing houses. Industry representatives, despite all these price increases, have shown that there is no decrease in housing demand, but rather that there is not enough housing stock in the face of serious demand. However, according to the representatives, the increase in housing sales and rent prices is not the only reason for the increase in foreign currency-related costs in the construction sector. Distrust of the Turkish Lira has turned real estate back into an investment vehicle and investors have started to want to turn their money into real estate.
The Rise in House Prices for Sale
In parallel with the contraction in the economic sphere, house prices for sale are increasing day by day. Compared to a few years ago and the present, there are houses that cost twice as much. This rise in house prices for sale is also affecting the rise in rental house prices.
Due to urban transformation, most people moved out of their homes and rented, resulting in a decrease in the number of rental apartments in the market. In addition, the increase in construction materials leads to a slowdown of urban transformation.
The continuous increase in inflation in Turkey in recent years and the consequent devaluation of the Turkish lira also cause an increase in rent prices. The fact that rental income remains low due to the inflationary effect and corresponds to less is driving landlords to increase rents in order to close this gap.