Get Ready for The Rise of Turkish Housing Market in 2025
In recent months, there has been a notable contrast between the prices of apartments for rent and those for sale in Istanbul. While rental prices have surged, the prices of apartments for sale have seen a decline. This raises a critical question: Is this downturn in housing prices temporary, or will it continue? Let's delve into what the latest data and trends suggest.
Recent Trends in Housing Prices
According to recent data, house prices in Turkey experienced a real decline for the first time in March. The prices of apartments for sale fell by 5.1 percent in nominal terms compared to the same period last year, whereas rental prices surged by 55-58 percent. This stark difference highlights the growing gap between the rental and sales markets.
The primary reason for the stagnation in housing sales is the increase in interest rates and the significant price disparity between Istanbul and other Anatolian cities. In smaller cities like Isparta, property prices might rise moderately, but in Istanbul, the jump is far more pronounced, creating a substantial price gap.
Market Self-Realization and Price Gaps
The market seems to be self-correcting. Following past election periods, there were significant spikes in both rental and sale prices. Now, we see two key factors influencing the decline in housing sales prices. Firstly, the market has begun to self-realize the true value of housing. Secondly, the price gap between metropolitan and provincial cities is playing a crucial role. For instance, while properties in smaller cities see modest price increases, the hikes in Istanbul are much steeper.
Challenges in Metropolitan Areas
Buying a house in major cities, especially Istanbul, has become increasingly challenging. The surge in rental prices at the start of the year has given way to a stagnation, creating an opportunity for those looking to rent. However, many people in metropolitan areas are eager to sell their real estate and invest in foreign currency or interest-bearing assets. The ownership rate has shifted from 64 percent homeowners and 34 percent tenants to a more balanced 56 percent homeowners and 44 percent tenants. High housing loan interest rates further complicate the dream of homeownership in these areas.
Future Predictions
While there is a current stagnation in the housing market, this is expected to change. By 2025, with the Central Bank potentially cutting interest rates, depositors might shift their investments back to housing. This trend is anticipated to gain momentum in the latter half of 2025 and into 2026. Additionally, the ongoing urban transformation projects will likely act as a catalyst for increasing housing prices.
Sector Support and Investment Concerns
The sector representatives are calling for support, particularly given the high construction costs and rising rental prices, which are dampening real estate investments. The difficulty in becoming a homeowner is compounded by the increasing preference for renting over buying, further affecting the market dynamics.
In summary, while the current trend shows a decline in housing prices, various factors suggest a potential rebound in the coming years. The market is self-correcting, and with the right economic conditions and support, housing prices might see an upward trend again by 2025.
