A striking trend in rents: Is September a month of opportunity?

This year, housing prices have shown increases below the rate of inflation. According to the most recently released data for July, there was a 14.3 percent decline in real terms for housing. A slowdown has also been observed recently, particularly in rent increases. While not as pronounced as the slowdown in housing prices, there is also a stabilization occurring in rents.

So, will the real-term decline in housing continue? Is September an opportunity month for renting? Will housing prices rise when interest rates fall? Explaining the points of interest regarding the subject to milliyet.com.tr, Real Estate Expert Mustafa Hakan Özelmacıklı stated the following:

“In general terms, when you look at the last 1 year, there is a real-term decline in housing prices, but we can say that this decline has normalized in recent months.

When we look at the figures, rising construction costs and decreasing supply are showing signs of a relative recovery in real estate prices. In general terms, we are still seeing rates below inflation.

This varies by province. In provinces like Istanbul, where real estate prices were priced in advance, the change in square meter prices for properties for sale is lower than inflation.

I believe that after seeing a decline in real terms for another 2-3 months, a recovery will begin with the new year, and price increases will catch up with inflation figures.

The increase in rents is occurring at a rate higher than the increase in sales prices. There is a relatively inflation-level increase in figures related to rents. Across Turkey, an increase in the number of rental apartments offered to the market has recently begun to be observed.

One reason for this is that individuals who own real estate for sale are inclined to rent them out following the expiration of the 25 percent rent cap, as they are finding it difficult to sell their properties during this period.

Perhaps property owners who were keeping their units vacant have become eager to rent out their apartments after the 25 percent rent limitation ended. There is an increase in the number of apartments for rent on the market. In terms of figures, we can say that the supply of rental apartments has shown a slight increase.

WHAT IS THE REASON FOR THE SLOWDOWN IN RENT INCREASES?

There has been a relative slowdown in rents compared to inflation. High interest rates on deposits have made being a tenant more advantageous than owning property. We see that today, instead of buying a house for 3 million TL, individuals earn more than the rent amount when they put that money into a deposit account.

If we say the average price per square meter for residential property for sale in Turkey is at the 30 thousand TL level, we can assume a 100-square-meter apartment is 3 million TL. The average rental price per square meter in Turkey is at the 180 TL level. For 100 square meters, 18 thousand TL can be considered as the rent figure. You can rent out an apartment you bought for 3 million TL for approximately 18 thousand TL. The house amortizes itself in about 14-15 years.

If you do not buy a house for this 3 million TL, but instead rent one for 18 thousand TL and deposit the money into a savings account, the amount the banks will pay you reaches 128 thousand TL per month. Deposits seem advantageous even for those who are somewhat inclined to become homeowners.

Today, even if a person has 1 million TL, if they deposit it in a bank, they can rent an apartment almost anywhere they want. With 1 million TL, one receives nearly 40 thousand TL in monthly interest. In the current economic climate, when you consider the question of 'should I become a homeowner or remain a tenant?', we can see that people are choosing to remain tenants in this context.

As interest rates fall, housing prices will rise. I anticipate significant increases in the real estate sector in 2025.

September can be considered an opportunity for this period. Challenges will begin in the seasonal segment, and home-work cycles will be normalizing in the market again. Those who want to buy a house can take advantage of September.

If a person were to take out a 2 million TL housing loan today and add 1 million TL of their own to purchase a 3 million TL home, the monthly installment payments over 120 months would be at the level of 62 thousand TL. That apartment could be rented out in that region for 25-30 thousand TL. Under current market conditions, it is possible to buy a home by taking on debt that is double the rental value, even with high interest rates. If interest rates fall in the future, the loan can be restructured."