Housing prices in Turkey: Q3 summary

Analysts began summarising the first three quarters of 2023 in October. Here are the key statistics.

CONTENT:

• Overall figures
• In the provinces: unexpected leaders
• Here are the detailed results for the top 30 provinces in september 2023
• Brief summary
• Land purchase
• What's the situation with rental prices?
• Renting in istanbul: focusing on transport accessibility

Overall figures

The average price of a property in Turkey in September was 2.9 million Turkish Lira (TL), approximately EUR 99,550.

Despite a revival in the market after May’s presidential election, the volume of transactions in September (109,656 sales across all provinces) decreased by 16% from August and by 9% compared to the same month last year. According to Endeksa, a key analytics portal relied upon by most market players for planning, forecasting and development strategies, Turkey's year-on-year housing price growth as of September was 109%, with the average selling price per square metre reaching TL 23,031. Additionally, the average return on investment period for residential property in the country has reduced to just 16 years.

Mortgage sales dropped around 50%, but this generally doesn't affect foreign buyers as mortgage issuance to non-Turkish nationals is prohibited in Turkey. Perhaps, that's a relief. 

Interestingly, the ratio of transactions in new builds versus resale properties is currently 30% to 70%, even though the number of more popular resale transactions also decreased: a 15% reduction over the first three quarters (January – September 2023).

Property sales to citizens of other countries decreased by 4% compared to the previous month and by 44% compared to September last year; the proportion of foreign buyers in the total market volume is also steadily declining – from around 5% a year ago to 2.9% as of September 2023.

However, the top provinces of interest to foreign buyers have remained stable for many months, these being Antalya, Istanbul, and Mersin.

In the provinces: unexpected leaders

For the first time in a while, Ankara has outpaced Istanbul in terms of housing price increases: residential property prices in the capital have risen by 126% over the last 12 months. The average price per square metre as of September is TL 18,771, with the average price per housing unit being TL 2.44 million.

In Izmir, the annual increase in value is 104%, with the average selling price per square metre of housing at TL 29,084, and the average price per housing unit at TL 3.8 million (yes, higher than the national average, Izmir is generally quite an expensive province).

Following these two is Istanbul. In Istanbul, the increase over the year as of the end of September is 93%, with the average selling price per square metre of housing being TL 34,856, and the average price for a single residence being TL 4 million. This is 25% higher than the national average.

However, two out of the three Turkish metropolises, along with their surrounding provinces, are lagging in terms of the dynamics of price increases compared to the recent dark horses – Hatay and Elazığ. The reason for the price increase in these areas is largely due to the February earthquake, the economic consequences of which are still being felt. Specifically:

• Housing prices in Hatay have increased by 158% over the last year, with the average selling price per square metre of housing being TL 17,512, and the average price per lot being TL 2.7 million.
• Elazığ is just slightly behind Ankara in percentage terms: a 124% increase, with the price per square metre being TL 10,979, and the average price per housing unit being TL 1.8 million.
• Interestingly, the leaders in price per housing unit are entirely different: Muğla and Aydın.

Here are the detailed results for the top 30 provinces in September 2023:

Brief summary

• Around 45% of all national sales occur in Istanbul, Ankara, Izmir, Antalya, Bursa, Gaziantep, and Mersin.
• The most expensive lots per square metre are in Mugla (TL 52,000), Istanbul (nearly TL 35,000), and Aydin (TL 31,000).
• The priciest properties on average per unit are again in Mugla (TL 6.8 million), Aydin (TL 4.7 million), and Istanbul (TL 4 million).
• The cheapest per square metre are in Elazig and Erzurum: just over TL 10,000. However, it's worth noting that just a month or two ago, the average price was around TL 8,000–9,000, indicating a monthly increase of 10% or more.
• The most affordable residences in terms of average price are found in Erzurum (just under TL 1.7 million) and Elazig (TL 1.8 million). These are followed by the less sought-after Batman (TL 1.9 million) and Kayseri (also TL 1.9 million).
• The shortest investment payback period, according to recent calculations, is in Ankara (just 14 years) and Eskisehir and Konya (15 years each). The average is 16 years in Erzurum, Manisa, Kocaeli, Tekirdag, and Gaziantep.
• The longest wait for investment returns is in Aydin and Mugla: 25 and 24 years on average, respectively.

Land purchase

In August, 10.1% of seekers were looking for land to own, which increased to 23.3% in September. This is likely linked to the prospects of budget-friendly homebuilding, a segment that is actively growing in Turkey. Recently, Turk Estate reported on the most profitable provinces for this.

What's the situation with rental prices?

Well, the rapid growth in rental prices that we saw last year has slowed down. In the top 10 largest provinces, there has even been a noticeable decrease in rental rates. According to data from another analytics platform, Emlakjet, last month the sales prices across Turkey increased by a few per cent in comparison to August, and rental rates dropped by 4%. Emlakjet's data shows that online property searches are roughly equal: just over 51% are for purchases, and nearly 49% are for rentals.

Regarding the monthly changes in rental prices by province, significant increases were only seen in Mersin and Şanlıurfa, which are among the most popular: Mersin saw a 4% increase and Şanlıurfa 2%. In contrast, Bursa experienced the most significant drop in rental rates, falling by 10%. There was an 8% decrease in Muğla (home to resorts like Marmaris, Muğla, Göcek, and Bodrum, possibly due to the end of the summer season); Istanbul, Antalya, and Ankara each saw a 3% decrease, and Ankara 2%. However, in Izmir, Aydın, and Tekirdağ, rental prices remained unchanged from the previous month.

Renting in Istanbul: focusing on transport accessibility

Let's discuss the most in-demand area in every sense. Rental properties near public transport stops - metros and Metrobuses - are highly sought after. According to Endeksa, in areas within walking distance of the five most popular stops in the metropolis (in the busiest locations), the highest average monthly rent is TL 62,524 - that's over EUR 2,000; the average price for a residence here is TL 12.7 million. The top area is Gayrettepe, known for its luxurious residences and the high number of foreign residents. 

Following Gayrettepe is Mecidiyeköy, with an average rent of TL 30,843 and an average residence price of TL 9.5 million; Çevizlibağ ranks third with an average rent of TL 25,864 and an average housing price of TL 7.3 million. Mecidiyeköy has an especially dense population.

A middle option is Uzunçayır: average rent is TL 23,782, and the average price for a residence is TL 65,568. A relatively inexpensive area, excluding the outskirts and suburbs, is Yenibosna: average rent is TL 21,197, and the average housing price is TL 5.3 million.

As for the rent per square metre: 

• Gayrettepe - TL 553
• Mecidiyeköy - TL 308
• Uzunçayır - TL 297
• Cevizlibağ - TL 281 

Evaluating the data, Görkem Oğüt, partner-founder and CEO of Endeksa.com, explained: “Due to traffic density, Metrobuses are one of the preferred modes of transport, covering the widest network of routes. With rising transport costs, rent and sale prices in areas minutes away from public transport, like Metrobuses, continue – and will continue – to rise. The housing stock in key areas provides easy access to major business centres, city business arteries, universities and social facilities is depleting quickly.”

Therefore, investors looking to profit from renting should pay attention to Istanbul's transport network development plans. Metro lines are constantly being laid out and plans for the next year or two are already set. However, one must not overlook the changing rental rules to avoid fines. It is important to consult with experts for assistance.