With the staggering rise in rents and house prices soaring amid a herd of overseas buyers, especially those fleeing the war in Ukraine, Turkey is on the brink of a housing crisis for low-cost housing, and unless government controls are put in place become, the social, political and economic consequences will be great.
Figures and data show that the real estate supply chain in Turkey is facing a major imbalance. According to the house price index compiled by the Turkish Central Bank, the purchase price of a house in Turkey has risen by 96 percent since February 2021, and in Istanbul increased by 106 percent.
Other studies paint an equally bleak picture, with housing market research released in April by the Bahçeşehir University Center for Economic and Social Research estimating the annual rise at 134 per cent, while the latest Eurostat house price index estimates the annual rise in house prices. with 60 percent in Turkey, which is six times the European average.
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The Turkish lira has not been able to recover since it lost 40 percent of its value in 2021 due to an annual inflation rate of 142 percent, and foreign investors sweeping the market, so it is unlikely that Turkish citizens will find affordable housing in their country find. , and as a result, many people have moved far away from downtown, or had to incur more debt.
The lure of obtaining citizenship and easy laws made Turkish real estate “lira-based” more attractive than ever, as the purchase of a property worth $ 250,000 automatically qualifies the buyer to obtain a Turkish passport, and in between 2017 and 2019 doubled home purchases by Foreigners. nearly 46,000 housing units, and Iranians and Iraqis were the most popular buyers.
Sales to foreigners rose by about 50 percent last December, and many of the new buyers were Russians and Ukrainians fleeing the conflict, and the Turkish government saw this trend as an opportunity rather than a tragic effect of the war , and accordingly in April the limit for obtaining citizenship up to $ 400,000.
Construction stopped or slowed down due to the pandemic, which caused a shortage of properties for sale, and the economic crisis led to a rise in the prices of building materials, such as cement, which led to a further slowdown in the construction of new homes, and while private and public banks offer home loans for a period ranging from 120 to 240 months at a price Interest rates range between 1.2 and 1.8 percent House prices have risen due to increased demand and shortage on offer The average Turkish monthly salary is 7,830 Turkish liras (about $ 530), which is not enough to get a home loan and barely enough for rent.
Buying a home has become out of the question for most Turks, but even rent has also been an issue, with the average rent increase so far in 2022 at 19.6 percent, and for that matter rents have risen by just 1.3 percent in the European Union rose at the end of the fourth quarter of the year.In 2021, with laws skewed in favor of landlords, Turkish tenants are really in trouble.
Property owners and companies have benefited from lax laws across the country and increased rents as they see fit, and many of them are doing so amid an influx of new buyers from Russia and Ukraine, and landlords want to rent their property to foreigners , as a recent advertisement for a rental property in “Esenyurt” reads. In Istanbul, it explicitly stated that “their properties are not suitable for rent by the Turks.” In 2021, the average cost of a two-bedroom apartment in the “Ataşehir” area of Istanbul was about 3,500 lira per month (about $ 240), and today it costs 9,000, and so it was rent in Antalya, a coastal town regularly visited by the Russians before the war was about 2,500 liras a month, and is now about 10,000. But, as shameful as these increases were, and as much as what angered Turkish citizens, Turkey’s property laws failed to thwart these increases.
Landlords evict existing tenants to make room for those who can pay more rent. Under the law, landlords can keep annual rent increases in line with the CPI rate, which was more than 15 percent in 2021, but after five years they can increase tenants the rent is above this maximum, and they can vacate the property after 10 years without any explanation. Tenants who are unable to pay rent have to vacate, and it is not surprising that housing litigation has put pressure on Turkish courts, as about 20 percent of all new cases in Turkey are related to housing disputes.
The war is certainly not the only cause of Turkey’s housing crisis. With the pandemic coming to an end and Turkey being a cheap destination, tourists are flocking to the country and landlords are choosing short-term leases through platforms like Airbnb, where half of rentals in Istanbul, unlike many parts of Europe, have restrictions on Airbnb set up to protect the housing stock, opportunistic landlords in Turkey can do as they please, but with no regulations, taxes or restrictions on These daily rents, the absence of government oversight is detrimental to the ordinary citizen.
Turkey is systematically marginalizing its people from the housing market, and with about 52 percent of Turks in debt and four out of ten who have taken out a loan from a family member in just the past three months, one of life’s basic needs, housing, became an almost burden.Impossible, and to stop this trend and protect Turkish citizens, the government must intervene.
Some increases in house prices and rents may be inevitable, but the pain it causes can be alleviated. While those fleeing conflict in Ukraine need shelter, leaders should also think about who the displaced actually are while providing that refuge.