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Why the cost of real estate in Turkey continues to rise?

Why the cost of real estate in Turkey continues to rise?

October 30, 2023

For a year everyone is waiting for the fall in real estate prices in Turkey, however, there is still there and the cost of real estate continues to rise. Why is this happening? There are several objective reasons: 

Inflation
Inflation in the country, which exceeded 60%, stimulates the growth of prices not only for food, but also for construction materials and other costs associated with the construction of buildings. And since the Ministry of Finance and the Ministry of Environment and Urbanization of Turkey have approved normative prices for the construction of buildings for 2024 twice as high as last year's prices, there is no reason to expect any significant drop in prices. The price of land plots, especially in prestigious areas, is also on an upward trend.
"There is no serious supply in the construction sector as many companies have left the market. If production was high and demand was decreasing, there would be a price decrease. However, there is no increase in production, so I don't expect prices to fall. There can't be, because construction costs have not decreased, but on the contrary continue to increase. Developers have adjusted their positions according to the costs for 2024 and prices have started to rise again," said Nazmi Durbakayıym, president of the Istanbul Builders' Association (İNDER). 

Unstable world situation
Turkey's real estate boom, which began in the pandemic, has certainly slowed down, but there are still many people who want to buy homes in the country. This is facilitated by a convenient geographical location, mild climate, good transport links with Europe and Asia, loyal attitude to emigrants and the fact that during any conflict Turkey has never refused to accept citizens who needed shelter and assistance. For Russian citizens, for example, Turkey is one of the few countries issuing residence permits and citizenship. The aggravation of the situation in Israel, although added nervousness, but everyone realizes that the direct conflict will not come to the point. 

The program of preferential mortgage lending for citizens of Turkey
Already announced a program of preferential mortgage lending, which is projected to be able to take advantage of about 7 million citizens of Turkey, respectively, and the demand for housing suitable for the program will grow with the growth of positive decisions on loan applications.

Increase in demand for real estate in the country
In the wake of the February earthquake, hundreds of thousands of Turkish citizens were forced to leave their homes. Even many of those whose homes survived, decided to move to more seismically safe areas of the country, which to some extent provoked a jump in prices for properties in Antalya and Mersin. There are still many people willing to move, and thanks to the launch of the program of preferential mortgage lending, there are even more of them.

External growth in demand for real estate
Of course, due to the Russian-Ukrainian conflict, citizens of the Russian Federation and Ukraine began to buy more Turkish real estate than usual. However, they are not the only buyers, and given the escalation of the Arab-Israeli conflict, experts predict an increase in buyer demand from Arab countries.

As you can see, there are no objective reasons for falling prices in the real estate market in Turkey and is not expected. Some number of buyers, undoubtedly, cut off the new regulation on increasing the cost threshold for obtaining a residence permit on tapu, but at the same time forced to hurry those who expect to obtain Turkish citizenship, thus balancing supply and demand.

Translated with www.DeepL.com/Translator (free version)

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