Analysis of the real estate market in Turkey: current trends and forecasts for the period from 2024 to 2025

The real estate market in Turkey has witnessed tremendous momentum in recent years, followed by a noticeable rise in real estate prices, especially in major cities such as Istanbul, Bodrum, and Antalya.

What are the factors affecting real estate prices in Istanbul?

1- Economic factors affecting real estate prices in Istanbul:

Inflation in Turkey:

Inflation is one of the most important factors affecting real estate prices, as an increase in inflation leads to a decrease in the purchasing power of the Turkish lira, which may prompt some sellers to raise their property prices.

Price inflation in Turkey is an increase in the average price levels of goods and services over a certain period of time. Inflation is an important indicator of the health of an economy and greatly affects a country's monetary and economic policies. There are several factors that affect the inflation rate in Turkey, including monetary policies. Monetary policies play an important role in determining the inflation rate, as the Turkish Central Bank takes monetary policies to control price inflation by adjusting interest rates and liquidity policies. Also, global economic changes such as oil prices and foreign exchange can affect the inflation rate in Turkey, especially since it is an open economy affected by international trade and investment. In addition, changes in demand and supply for goods and services can cause price inflation, especially if supply is limited and demand is high. Also, increased production costs such as energy costs and wages can be reflected in the final prices of goods and services, contributing to inflation.

Interest rate in Turkey:

The interest rate in Turkey is determined by the Monetary Policy Council of the Central Bank and is considered one of the main tools of monetary policy to achieve certain objectives such as determining the inflation rate and promoting economic growth. The interest rate in Turkey is affected by several factors including economic and political factors and expectations about future monetary policy. The interest rate directly affects the cost of borrowing. As it rises, the cost of purchasing a property with real estate financing becomes more expensive, which may lead to a decrease in demand for real estate and thus a decrease in prices.

Economic growth in Turkey:

Economic growth positively affects the real estate market. As the economy improves, the demand for real estate increases, which may lead to higher prices. Economic growth in Turkey is affected by several factors, including investments, as investment plays an important role in achieving economic growth, whether from the private sector, the public sector, or foreign direct investments. Encouraging investments can boost production and create new job opportunities. Also, domestic consumption plays a vital role in promoting economic growth, as personal spending and domestic consumption enhance demand for goods and services and thus encourage increased production and spending. Turkey's foreign trade is an important factor in economic growth, as it contributes to increasing exports and reducing the trade deficit, and good trade relations promote economic growth. Finally, political and security stability play a vital role in attracting investments and enhancing confidence in the economy, which contributes to enhancing economic growth.

2- Political factors affecting real estate prices in Istanbul:

International relations with Turkey:

International relations affect investors' confidence in the real estate market. As international relations improve, foreigners invest in real estate increases, which may lead to higher prices. International relations with Turkey are witnessing continuous changes and are affected by various regional and international factors. Turkey has an important strategic location between Europe and Asia, making it a major player in the region. Turkey follows an active foreign policy aimed at strengthening its influence in the region and expanding its relations with various countries.

Political stability in Turkey:

Political stability directly affects investors' confidence in the real estate market. With political stability, foreign investment in real estate increases, which may lead to higher prices.

3- Social factors affecting real estate prices in Istanbul:

Population growth in Turkey:

Population growth increases demand for real estate, which can lead to higher prices. In recent decades, Turkey has witnessed important shifts in population growth and population distribution. Turkey is experiencing moderate population growth, with the annual population rate rising at a rate of about 1.2%-1.3%. However, population growth rates vary between urban and rural areas, with population growth in cities generally being higher. The population distribution in Turkey is largely based on large cities such as Istanbul, Ankara, Izmir, and Bursa. Istanbul alone is the largest city in Turkey and attracts many residents and immigrants from different regions.

Immigration to Turkey:

Immigration affects the real estate market. As the number of immigrants increases, the demand for real estate increases, which may lead to higher prices. Some people turn to Turkey in search of political and economic safety and stability, whether they are from neighboring countries or from other countries. Also, Turkey is an attractive destination for immigrants in terms of economic and work opportunities, especially in large cities such as Istanbul, Ankara and Izmir, where there are diverse job opportunities in various sectors.

4- Property specific factors:

Location:

The location of the property is one of the most important factors affecting its price. Properties located in central areas or close to services are more expensive than properties located in distant areas.

Property type:

The price of the property varies depending on the type of property, whether it is a residential apartment, villa, land, or commercial property.

Property condition:

The price of the property varies according to its condition, quality, and finishes. New properties or properties that have been renovated and updated are often more valuable than properties that are used or need maintenance.

Property area:

In residential real estate, the price of a property depends largely on its area. Larger properties are often more expensive than smaller properties in the same area.

Facilities and services:

The property's proximity to public facilities and services such as schools, hospitals, and public transportation greatly affects its value.

Demand and supply:

Demand and supply of properties in the specific area can also affect the price of the property. In areas that witness a continuous increase in demand, the price of real estate may increase.

Government policies:

Government laws and policies related to real estate such as property taxes and real estate legislation can affect the value of the property.

Real estate price forecasts in Turkey in 2024-2025

Some experts expect real estate prices to continue to rise during the years 2024- 2025, supported by the following factors:

• Continued economic growth: The International Monetary Fund expects the Turkish economy to grow by 5.3% in 2024 and 5.0% in 2025.
• Low interest rate: Some experts expect that the interest rate will decrease during the years 2024- 2025, which will make purchasing a property with real estate financing easier.
• Increased demand for real estate by foreigners: Turkey is expected to continue attracting foreign investors, which will increase the demand for real estate.