Why Are Real Estate Prices Increasing in Turkey?

Rapidly rising property prices in Turkey have investors wondering what's going on. The price increase is driven by a number of factors, including high inflation, a weak local currency, a bullish property market, local population growth, and domestic and international migration. This blog will highlight some of the key factors contributing to the rise in property prices in Turkey. 

Influx of Buyers

Turks are turning to real estate to protect their savings from inflation. Home sales in Turkey increased by 20.6% to 134,170 units in March 2022 (Turkish Institute of Statistics). Low-interest mortgage opportunities have also made it easier for first-time buyers to climb the real estate ladder. Sophisticated foreign investors looking to use their properties for citizenship programs and the lira's depreciation against currencies such as the euro also boosted demand.

Sales to foreigners grew by 31% in March 2022, according to the Turkish Statistical Institute, and the number of foreigners buying Turkish property continues to break records as more and more foreigners discover the beauty of investing in Turkey. Most European countries are also facing an economic crisis, which has prompted many to invest in real estate elsewhere.

Material Prices Rise

With construction activity slowing, partly due to the pandemic, only 500,000 new condos have hit the market each year over the past three years. This is a significant reduction compared to the annual needs of 1 million households. In addition, construction costs have increased due to the relatively weak Turkish lira due to imports of raw materials such as iron and cement. Construction companies are struggling to keep up with the prices of materials they buy abroad, slowing construction. There are many positive aspects of Turkey that continue to attract foreign buyers, including a high return on investment (ROI), an exemplary standard of living, and gorgeous and modern properties.

Supply Chain Disruption

Global supply chains have been disrupted by Covid-19. This shortage of supply has severely impacted the rise in new home prices in the country. In addition, less land is available for new construction, and land is sold at a premium, increasing pre-construction costs. Developers are forced to pay top market prices and pass these costs on to consumers.

Residential Real Estate Price Index

The Residential Property Price Index (RPPI) is an index that measures how quickly residential property purchases by households have changed over time. In February 2022, Turkey's RPPI rose by 96.4% annually, which came amid rising inflation. About a year ago, the index was growing at an annual rate of 32%. Potential home buyers should act quickly and expect prices to continue to rise.
The real estate industry is generally a solid investment. Although no one can predict the future trend of the Turkish real estate industry, prices will continue to rise, so now is the best time to invest and don’t regret missing out.