According to the Turkish Statistical Institute, local real estate prices are rising every month. For 2021, Turkey has become the country with the most rapid increase in apartment prices. During the year, residential properties have risen by more than 50%. And in the most popular areas of the prices rose even more strongly. In Istanbul, Alanya and a number of other cities have risen significantly not only residential sites, but also land and commercial real estate.
Foreign investors point out that every year buying an apartment in Turkey is becoming more and more expensive. However, this is not an artificial overpricing, caused by the increased demand. Reasons for the rise in price are objective, and there are many of them.
Why Turkish real estate prices rise
Today, apartments in Turkey are becoming more expensive not only because of the pandemic. There are a number of internal factors specific to the local market. About them we will talk below.
The land has become more expensive.
In recent years, there is a mass building in Turkey. At this point is already fully built-up prestigious areas of Istanbul, Antalya, Alanya, Izmir and other major cities. Accordingly, for the erection of new real estate developers have to look for locations in more remote areas. But there is not much free land, which leads to competition. Today, land for construction located within the cities of Turkey costs a fortune. The same applies to those lands that are located at a distance from the urban infrastructure, but have everything you need for a comfortable life.
Construction has become more expensive
This is one of the main reasons for the increase in property prices. During the last year, construction costs have risen by an average of 67%. And construction materials have risen the most. The pandemic has had a negative impact on the production of building and finishing materials, which led to higher prices. Today Turkey imports most of them, making purchases in foreign currency. And for some types of imported building materials rose in price by more than 100%.
Of course, developers will not work at a loss. Therefore, the prices of apartments in new buildings are inexorably going up.
The prices for transportation costs have risen.
To build a house, you need not only to buy the necessary building materials, but also to take care of their delivery to the construction site. And sometimes the raw materials must be delivered from abroad. Accordingly, the cost of the apartment in Turkey must include transportation costs.
Petrol in the country is becoming more expensive every year. Turkey imports oil, which also does not get cheaper. This leads to an increase in the cost of fuel purchase and its subsequent retail sale to the end consumer. As a rule, gasoline in Turkey becomes more expensive every month, sometimes more often. Accordingly, transportation costs are costly for developers.
Demand for real estate is constantly increasing
Every year more and more foreigners want to buy an apartment in Turkey. This decision is obvious, given the transparency of laws, the stability of the economy, inexpensive life, quality health care and a high level of government loyalty to foreign investors.
Given all the above factors, many investors are choosing to invest not in “hyped” European real estate, and objects in Turkey. Foreigners are not deterred even by the soaring prices of Turkish apartments – from year to year the demand remains invariably high.
Moreover, many Europeans buy residential property for relocation. For example, in the province of Antalya last year registered 42 thousand foreigners. Europeans also buy apartments to stay in Istanbul and Alanya. Today, the Americans, the Chinese, the Russians, etc. choose Turkey as their second home. And increased demand could not but affect the price level.
A limited number of proposals
A well-known proverb says that demand creates supply. However, this axiom may not work in a pandemic. Thus, over the past couple of years active development in Turkey has come to a halt. Few new apartments for this period have appeared, and the demand for local real estate has not decreased.
In addition, to support citizens Turkish government decided to lower interest rates on mortgages. Such actions have led to the fact that in 2021 in Turkey have been recorded record sales of housing. Accordingly, the high level of sales at a reduced rate of construction led to a reduction in the stock of housing. This also led to a rise in real estate prices.
Increase in the cost of paperwork services
Today inflation is one of the world’s most serious problems. The national currency of many countries is gradually depreciating against the dollar. And Turkey is no exception. In this regard, the local government is taking measures to support the economy and the population. However, it will not be possible to solve this problem quickly. And that is why today we can see the rise in property prices.
Rising prices are causing professionals to raise the cost of their services. A year ago, lawyers and translators were charging three times less than they do now. And it concerns not only private individuals – price hikes have also affected state organizations. Construction licenses today also cost more.
Thus, even a month of delay can lead to the fact that the apartment in Alanya will add to the price. And we are talking about a tangible increase in price, which is able to hit the pockets of small and medium-sized businesses. To buy property in Turkey at a discount at the moment is almost impossible. Seeing the updated price lists of developers and given the high demand for Turkish apartments, investors are not willing to make concessions.
Some foreign buyers hope to catch the “urgent sale”. This is a situation where the owner considerably reduces the price, hoping for early completion of the transaction. However, in today’s market conditions it is almost impossible to buy such an apartment. The fact is that all the profitable properties are quickly intercepted by Turkish realtors.