Latest data released, real losses in housing continue: What happened to housing prices in Istanbul, Ankara, and Izmir?

Although housing prices have shown an increase recently, this rise has remained below inflation. The latest data released by the Central Bank shows that the real-term decline in housing prices continues. According to the Residential Property Price Index data, housing prices increased by 0.9 percent in July compared to the previous month and by 38.7 percent compared to last year.

Despite a 38.7 percent increase on an annual basis, prices showed a 14.3 percent decline in real terms when adjusted for inflation.

While housing prices in Istanbul and Izmir fell by 0.2 percent on a monthly basis, they rose by 0.6 percent in Ankara.

Evaluating the details of the subject for milliyet.com.tr, Real Estate Expert Mustafa Hakan Özelmacıklı stated the following:

“When we look at the Residential Property Price Index data, we see a recovery. Some increases have begun to occur. In other words, we are starting to see the real-term decline decrease.

In the data released last month, the real-term loss was at the 14.9 percent level, while in July, the real-term loss reached the 14.3 percent level.

We believe that the real decline in the next month's House Price Index figures will be somewhat more suppressed. July was a month that saw a very significant increase in housing sales. I think that the real-based decline will relatively ease in the coming months.

One of the most important reasons preventing a real-based decline in housing prices is construction costs, which have increased by 66 percent. While construction costs are rising, there is also no sufficient supply shock. Rental income has increased, which has reduced amortization periods in real estate.

With the removal of the 25 percent rent cap, the process of putting properties back on the rental market has accelerated. We are seeing rental amortization rates in many provinces across our country drop to levels never seen before. In Istanbul, rental amortization periods have fallen to as low as 17 years. Two years ago, this rate had risen to 25 years.

The increase in university preferences and the expansion of the urban transformation process in Istanbul appear likely to drive up prices in the rental apartment sector.

WHAT IS THE MOST IMPORTANT REASON FOR THE REAL DECLINE?

The most important reason for the real loss is the inability to utilize housing loans. These loans cannot be used due to high costs. Access to credit in the market is quite limited due to the 3 percent monthly interest rate on 120-month maturities. The share of mortgaged housing sales within total housing sales has fallen to 9 percent.

While deposit interest rates were high, real estate was not the primary choice for citizens. This trend seems to be slowly starting to recover. I believe the first signals of this began to emerge in July. The withholding tax introduced on KKM (Currency-Protected Deposit accounts), the fact that foreign exchange rates have not risen significantly, and the sideways trend in the stock market seem to suggest that the real estate sector will come to the forefront in the coming months.

When we look at the Residential Property Price Index announced by the Central Bank, we see that the square meter values do not align very well with listing prices because these are properties subject to appraisal reports. It is possible to say that, within the framework of Central Bank data, housing prices across Turkey average approximately 33,500 TL per square meter.

While these figures are at the 47 thousand TL level in Istanbul, they are at the 27 thousand TL level in Ankara. We can say that the approximate price in Izmir is at the 38 thousand TL level.

When we look at the listing prices on websites, the figures for square meter prices for sale are at the 40 thousand TL level in Istanbul, 34 thousand TL in Izmir, and 22 thousand TL in Ankara.

When we look at the breakdowns within the Residential Property Price Index, we still see percentage-based declines in housing prices in Istanbul and Izmir. There is an increase of around 6 percent in Ankara. It is possible to say that there are still partial declines in Istanbul and Izmir.

WHERE ARE PRICES AFFORDABLE IN ISTANBUL?

There are affordable properties for sale in districts outside the city center in Istanbul. Along the E-5 route, there are areas like Beylikdüzü, Büyükçekmece, and Silivri. Looking to the north, Esenyurt is a place where prices are more affordable. On the Anatolian side, there is accessibility to affordable housing in some regions such as Sultanbeyli and Çekmeköy.”