Is now a good time to invest in the Turkish real estate market

October 10, 2023

Yes, the exchange rate is rising rapidly… Housing campaigns are coming one
after another. And everyone who wants to invest right now, especially those who
have accumulated foreign currency, has the same question: Is now the right
time? We discussed the issue with all the details.
Housing prices are at the lowest level in dollar terms…
With the increase in the dollar, housing prices decreased by 20% in dollar terms
in one year. In May last year, the dollar rate was around 3.50, and today, the
exchange rate is at 4.50. While the dollar rate increased by about 30% in a year,
the price of branded residences increased by only 4%, according to industry
reports for the same period.
In other words, while a house you bought for 400,000 TL last year was 114.000
Dollars, today the price of the house has become 416,000 TL and has decreased
to 92.500 Dollars.
In other words, for investors with dollars in hand, housing prices are at the most
affordable level right now.
In the long run, real estate is always more profitable against the dollar.
When we look at the last 15 years, it is seen that real estate has always been
valued more than dollars in the long run. Housing prices in Istanbul increased
4.2 times between 2003 and 2018. In other words, a house that was 100,000 TL
in 2003 was sold for 420,000 TL in 2018.
While the dollar rate was at the level of 1.50 in May 2003, it is behind the real
estate increase and is at the level of 4.50 today with a 3-fold increase. In other
words, if you bought a dollar for 100,000 TL instead of a house in 2003, the
present value of your dollar would be 300,000 TL, and your home would be
worth less.
After the rapid rise of the dollar, there is usually stability or decline. The dollar
investor, whose profits from the dollar increase in the short term, can make more
profit in the long run by investing in the property at the right time.
Housing both makes a premium and earns rental income.
All of the above-mentioned calculations are based only on the value increase of
the house. Considering that in addition to the rise in value, the housing also has
rental income, the income of the housing investor is even higher.
In today’s conditions, a house pays for itself with an average rental income of 18
years. In other words, while the value of the house you own increases, you will
earn twice by earning rental income.
Housing costs increase every quarter; hike soon.
The increase in the dollar also increases the construction costs. Since the
consumer will not accept a rapid price increase, construction companies
generally reflect the cost increases in their prices 6-12 months later. According
to TUIK data, the Construction Cost Index has increased 36% in the last two
years. Housing prices, on the other hand, have increased relatively little. In other
words, construction companies have to reflect this cost increase in prices very
It’s time to own a house with the historical campaign.
The support of the state continues for the housing sector. The title deed fee,
which is 4 percent and usually half shared between the construction company
and the buyer, has been reduced to 3 percent until October 31, 2018. For
residences with a VAT rate of 18 percent, the VAT rate has been reduced to 8
percent until October 31. In addition, housing loans with an interest rate of
0.98%, initiated by public banks, stimulated the sector considerably.
40 real estate companies united under the roofs of Konutder, Gyoder, and Inder
announced that the 20% discount and 5% down payment campaign in cash and
housing loan sales will continue until June 15, 2018.
Now is the perfect time to buy a house. To explain with an example, The cost of
a house worth 500,000 TL used to be 600,000 TL with 18 percent VAT and 2
percent title deed. Within the scope of the campaign, the value of the same
house drops to 400,000 TL with a 20% discount. With an additional 8 percent
VAT and 1.5 percent title deed fee, the total cost to the buyer comes to 438,000
TL. In this way, the investor can earn 162,000 TL or a 27 percent discount on a
house with a cost of 600,000 TL. In addition, it provides an advantage of 1950
TL per month in loan payments due to both the use of less amount of loan and
the low interest rate loan.
Real estate prices in Turkey are calculated in dollar terms, not TL.
Due to the pandemic, the high demand for summer residences was effective in
the rapid increase in housing prices in the last year. There was a demand in
panic. However, this demand will decrease as the pandemic becomes routine.
This means that there has not been an excessive bubble in housing prices in
Turkey. Since incomes have been rasped, housing demand will not continue at
the same pace unless there is a crisis in the monetary system.
Apart from the pandemic, the occasional speculative increase in housing prices
in Turkey was caused by the anti-competitive intervention of the political power
in the market.
Is it the right time to invest in real estate?
1. The government grants citizenship to a foreigner who gives 250 thousand
dollars. He announced that 19 thousand people became citizens in this way.
2. The government gives low credit through the public banks in order to
stimulate the economy and in the elections. Because of this last year, housing
prices increased by 20 percent overnight.
3. TOKİ implementation creates unfair competition for the private sector. TOKİ
does the housing projects, approves them, and does not pay any fees. However,
the private sector gets its projects approved within a period of up to one year,
only by the municipalities and by paying a fee. The state has to prevent unfair
competition. However, TOKİ creates unjust competition against the private
sector in this case.
4. Houses are also seen as an investment tool. Savings held in TL melt away as
deposit interests provide negative returns. In addition, savings are escaping TL
because there is a problem with trust.
5. Foreign currency is also invested as a financial investment tool. However,
especially in recent years, the loss of confidence in the world against the dollar
has started to cause concern about the future of the banknote. Moreover, a
discussion started about whether something would happen to the foreign
currency deposits in the banks.
6. In recent months, accusations of informal economy and black money have
been announced by the political power and some circles directly or through
social media. Real estate is the best money laundering tool, and this led to an
increase in demand and an increase in prices.
Last word; Even if real estate prices fall in the short term, Turkey’s rapid
population growth and rapid urbanization will increase housing prices in the
medium and long term. In addition, the rental income of the houses and their
value increase. For these reasons, the high demand for housing continues.
The housing loan interest decision has energized the real estate sector!
How much did housing prices increase in Turkey?
It’s the right time to own a home!

Leave a Comment