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Revised April, 2024 – Resource, Turkey iResidence
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THE EXPECTED BALANCE IN THE HOUSING MARKET COULD NOT BE ACHIEVED
The interest rate increase and the recession in the markets were not enough for the expected declines in the housing market to come. The expectations in the global market were not fully reflected in Turkey, which broke records in housing price growth.
Turkey iResidence listed it, here are the reasons.
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Investors were confused by the fact that the expected price decreases did not occur in the housing market, which was expected to slow down along with rising interest rates.
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While the projected improvements in the global housing market were not fully realized, the rate of housing inflation in Turkey also slowed down, but the upward trend in prices and a high trend continued.
The most important reasons for the failure to achieve the expected stabilization in housing prices were high household savings, low supply and an increase in the number of immigrants.
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TURKEY IS AGAIN THE LEADER IN HOUSING PRICE INCREASES
According to the research results of the international real estate consultancy company Turkish iClassified covering 56 countries and regions, Turkey became the country where housing prices increased the most with an annual percentage of 96 in the second quarter. However, when it is taken into account that this rate was 132.8 percent in the first quarter, the decline in the price growth rate attracted attention.
April-May-June housing prices in Turkey also increased by 13.8 percent in the second quarter covering the months of April-May-June. In the first six months of 2023, the increase in housing prices was 39 percent.
According to the Respublic of Turkey Central Bank data, housing prices increased by 94.7 percent year-on-year in July 2023. Thus, the decline in the annual growth rate continued in July. The average house price in Turkey was 2.63 million TL.
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GLOBAL HOUSING MARKET
When we look at the global data, it was seen that housing prices fell, but these declines remained limited. Swiss banking giant UBS stated in its Global Real Estate Bubble Report published last month that imbalances in the housing market have decreased.
It was stated that real housing prices fell by an average of 5 percent from mid-2022 to mid-2023 in the 25 cities examined by UBS, and it was reported that further price declines were likely.
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THE EXPECTED BALANCE COULD NOT BE ACHIEVED
But the double-digit price declines that analysts predicted earlier this year due to rising mortgage interest rates have not fully materialized. High household savings, low supply and an increase in the number of immigrants limited the declines in 2023.
According to the Turkish iClassified report, while prices fell in four out of every ten markets in the first quarter last year, a decline in only a third in the last three months indicated a moderate improvement in global Sunday conditions.
On the other hand, the recent deceleration in global property prices is largely thought to be over, according to a Reuters poll of real estate analysts last month. In addition, average home prices in major Sundays are expected to fall less than expected at the beginning of the year and rise in 2024.
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WHAT IS THE REAL ESTATE SITUATION IN TURKEY?
A similar situation applies to Turkey. While Turkey maintains its position as the country where housing prices have increased the most in the world, it has been seen that the price growth rate has slowed down after increasing interest rates.
However, reasons such as granting citizenship to housing purchases, continuing immigration from the Middle East, the Gulf, Europe and Russia, and limited housing supply prevented a real stabilization in prices.
“It seems unlikely that the recent transition to an orthodox approach in monetary policy will lead to a rapid decrease in inflationary pressures,” the Turkish iClassified report also stated on the subject.
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