Will real estate prices in Turkey decrease?

Overview of Real Estate Prices in Turkey in Recent Years

The Turkish real estate market is known for its dynamism, making it one of the most effective investment fields, thanks to the good profits it generates for investors.

Over the historical period of the last decade (the past ten years), it can be observed that real estate prices in Istanbul - in general - have remained stable, with price increases reaching about 13.6 percent when comparing prices between 2014 and today - as we approach 2023 - based on the price chart obtained from the Zingat website specializing in the Turkish real estate sector.

The price per square meter of properties built in 2014 was about 2,231 Turkish lira, while the price per square meter for properties built at the beginning of 2023 was about 21,260 Turkish lira. Considering the exchange rate difference between the lira and the dollar, the equation is shown in the following table:

Have Real Estate Prices in Turkey Reached Their Peak?

The prices mentioned above, as analyzed by Imtilak Real Estate from the available data, show that real estate prices today in Istanbul, for example, are similar to their natural levels during the period before 2018.

Therefore, we can say that real estate today is still within its natural price range before the steady then sharp decline in the Turkish lira exchange rate. This means that real estate prices today are still capable of increasing, especially with rising demand and the imbalance between supply and demand for luxury projects in particular.

Is It Expected That Real Estate Prices in Turkey Will Decrease?

It is well known that real estate goes through a cycle of recurring and sequential phases, consisting of four uninterrupted stages:

1. The Prosperity and Recovery Phase

This phase usually comes after a period of stagnation in the real estate sector, where there are successful opportunities and deals that attract major domestic and foreign investors. Construction activity accelerates, excess supply gradually decreases, and prices begin to stabilize, with demand expanding in parallel with supply, revitalizing the real estate market.

2. Then the Expansion Phase

When real estate production expands and aligns with demand and prices, which later leads to price increases based on rising demand and attracts more investors.

3. Then the Saturation and Accelerated Supply Phase

After a long period of recovery and expansion, a phase arrives where the supply of real estate increases and accelerates, supply equals demand, and then exceeds demand, causing prices and rents to stop rising.

4. And finally, the Stagnation Phase

Supply becomes greater than demand, rents and real estate prices begin to decrease, and there may be an accumulation of vacant properties. At this point, the real estate cycle reaches its bottom and peak stagnation, after which the cycle starts anew.

It is also well known that market economy and its vitality depend on the rise of supply and demand, which are fundamentally linked to consumer behavior and psychological state, which can affect the market between desire and fear, optimism and anxiety.

Based on the above, we find a significant difference between the state of the Turkish market and the hypothesis of price decline at this stage, as there are fundamental reasons proving that the Turkish real estate market is in dire need of more real estate products. Therefore, the Turkish government's attempt to bridge this large gap between supply and demand came through the announcement of its massive project to produce about 250,000 housing units in installments via a lottery mechanism for certain segments of citizens.

What Are Experts' Expectations for Real Estate Prices in Turkey?

According to a special statement by Engineer "Baraa Badanjki," CEO of Imtilak Real Estate, about the future of the real estate market in the coming period:

"Properties in Turkey are generally maintaining their prices during the current period, with a slight decrease in some areas. However, the ongoing supply issue combined with global inflation in the prices of raw materials will inevitably lead to higher costs, which will naturally increase real estate prices in the coming period, especially in the luxury property categories, due to the limited supply of these types of properties, such as residential complexes with high-end amenities, or what can be described as luxury properties.

At the same time, the supply in the real estate market is still much lower than the actual demand, despite the purchasing power issue. Demand remains strong, creating a balance between supply and demand and putting pressure towards price stability, in addition to the potential for significant future demand due to the large population, which bodes well for price increases again.

Therefore, it is expected that prices will maintain their current state with a period of stability for a certain period—about 5 months, give or take—due to the general anticipation for the market's future after previous price increases. Then, prices are expected to continue their upward journey."

He added: "There is also another theory suggesting the possibility of prices dropping again if the exchange rate changes, but this drop will not affect real estate prices in the long term, only in the short term. Then, properties will adjust their prices according to the exchange rate, leading to increased profits as expected."

How Will Turkish Government Housing Projects Affect Real Estate Prices in Turkey?

On this topic, Mr. "Baraa Badanjki" said: "As for properties located in areas known as 'Mahalle' in Turkish terminology, or types of cheap or small properties designated for low-income individuals, such as those built by the Turkish government and sold to citizens in installments via a lottery system, we may see a decrease in their prices due to the new government projects or those offered by TOKI."

However, this does not apply to luxury properties, due to the previously mentioned limited supply of this type of property.

How Can I Buy Property at an Acceptable Price in Turkey?

Describing a property's price as "acceptable" is relative and depends on the proposed budget, the area where you want to buy, and the specifications of the property you want to purchase.

However, it is useful to discuss two options for ownership here:

First: Buying new properties:

The location and specifications of the property, then its size and finishing, play a key role in determining its price. Just as areas differ in their terrain and features, they also differ in their real estate opportunities.

Projects that are still under construction offer a good opportunity to buy at a lower price, in addition to the benefits that expert real estate consulting services provide in identifying the best possible opportunities in the market, which Imtilak Real Estate does in the best and most complete way.

Second: Buying resale properties:

If your budget does not allow you to buy new properties, we then advise you to consult Masaken Real Estate, one of the companies of the Imtilak Investment Group.

Masaken, which specializes in resale properties, allows you to explore more opportunities at lower prices, which are usually less expensive than new properties, with the quick and rare opportunities provided by Masaken Real Estate that are worth seizing.

Special Real Estate Offers and Exclusive Investment Opportunities from Imtilak Real Estate

Our many years of experience at Imtilak Real Estate, and our widespread activity across the most important Turkish cities, as well as our significant market share in both exclusive and non-exclusive projects, have allowed us to provide unique ownership opportunities at suitable prices for most investment segments.

At Imtilak Real Estate, we have built our strong and cohesive foundation in real estate services from A to Z, through a smooth and integrated workflow that covers all stages of ownership and post-ownership, providing our clients with a flawless investment experience and helping them obtain the best real estate opportunities in the shortest and easiest way possible.

Edited by: Imtilak Real Estate©