Turkey’s housing sector is experiencing a serious slowdown due to high interest rates, rising prices, and declining housing production. Although the rapid rise in housing prices began to slow down in mid-2024, the extremely high interest rates on mortgages remain a major barrier for buyers. For those unable to make cash payments, owning a home has become nearly impossible. This has led to increased demand for rental properties, further driving up rent prices.
Investors Steer Away from Real Estate
Deposit interest rates reaching up to 50% have also pushed investors away from the housing market. For example, a house worth 7 million TL in Istanbul generates a rental income of about 40,000 TL per month, whereas the same amount in a bank yields around 250,000 TL monthly. This gap makes real estate a less attractive short-term investment. However, some experts argue that with inflation, the real value of property will continue to rise, making it a profitable investment in the long term. A potential decline in inflation in the last quarter of the year, along with a decrease in interest rates, could help revive the housing market.
No Decline Expected in Rent Prices
Rent prices, especially in major cities, remain a serious issue. The shortage in housing supply, increasing demand from university students, and a population concentrated in city centers are all contributing to high rents. Experts emphasize that long-term solutions require increased incentives for first-time homebuyers and the development of affordable housing projects for low-income citizens.
Urban Transformation Moving Slowly
Urban transformation remains a controversial topic. Although it often comes to the forefront following earthquakes in high-risk areas, these projects are progressing slowly due to bureaucratic obstacles and financial concerns. Experts stress that stronger incentives, tax benefits, and new financing models are needed to accelerate the process for both residents and developers.
Conclusion
In summary, the housing sector in Turkey is squeezed by high interest rates, supply shortages, and economic uncertainty. Experts underline that improvements in macroeconomic indicators and structural reforms are essential for the sector to recover.
source: excerpt / summary from article on ekonomim.com
