Real EstateLocal Turkiye

Endeksa: New Developments are on the Agenda with a 17% Decline in the Real Estate Market

Endeksa, which offers real estate value calculations using big data analysis and artificial intelligence methods and thus allows users to sell real estate safely, evaluated the sales in the real estate sector in 2023 and shared the expectations for housing prices in 2024.

In a broad perspective, 2023 was a year of decline for the housing market. A total of 1 million 225 thousand 926 houses were sold in Turkiye throughout the year, a 17% decrease compared to 2022. December was a month when the market was a little active with 138 thousand 577 units sold and there was an increase compared to previous months, but despite everything, the data points to a 33% decline compared to December 2022. In the last month of 2022, 207 thousand 963 houses were sold in Turkiye.

A 17% decrease was detected in second-hand sales in 2023 compared to last year. In 2022, 1 million 25 thousand 543 second-hand houses were sold in Turkiye, whereas this figure remained at 813 thousand 814 in 2023. On the other hand, when viewed from the same perspective, the decrease in mortgage sales is much greater. In 2023, 177 thousand 748 houses were sold with credit in Turkiye. In 2022, this figure was 280 thousand 320, which reveals a decrease of 37%. It is seen that the decrease in house sales on credit is inversely proportional to the increase in interest rates, and as interest rates increase, house sales on credit decrease.

At the End of 2023, the Average House Price was ₺3 Million 92 Thousand 700

In general, it is seen that housing prices in Turkiye have increased by 84% in one year by the end of 2023. Currently, the average residential square meter sales price is ₺23 thousand 790, the average housing price is ₺3 million 92 thousand 700 and the investment amortization period is 15 years. The average time to market a house for sale is 64 days.

Purchasing Power Index Decreased by 38%

Increasing housing prices and loan interest rates also affected the housing affordability index. When comparing December 2023 and 2022, it is seen that housing purchasing power decreased by 38%. The Endeksa report reveals that the loss of effect of increases in household incomes towards the end of the year and the narrowing of loan installment payment opportunities are also effective in this trend. Depending on these factors, the highest mortgage loan average interest rate of the last 5 years was reached in 2023. Especially in the last two months of the year, monthly interest rates increased to 3.51%. Interest rates were around 2.19% in January 2019, and there were months when they dropped to 0.76% in the five-year period.

Evaluating the developments in the housing market in 2023, Endeksa Founding Partner and General Manager Gorkem Ogut stated that the Turkish housing market is going through a historical stagnation period and continued his words as follows:

“We are in a period when sales volumes are at their lowest level in the last 9 years and the share of credit transactions in total has decreased to 14%. Since the market has slowed down at the moment, it is possible to say that those who have cash in their pockets have bargaining power. In addition to increasing construction costs and shrinking credit opportunities, we think that expectations about the credit campaign that is expected to be implemented in the near future are also effective in this recession. In addition, there is also a group of people who think that the income generated from different investment instruments is sufficient and that real estate investment is no longer attractive. Still, 2024 seems hopeful with many developments that will positively affect the housing market. The first of these is, of course, the campaign that is expected to offer loans with a 15-year interest rate of 1.20% to those who will buy their first home. Another important point is the possible developments regarding the real estate valuation system. This long-term project has now reached its final stages and a resource that will guide taxation and valuation while preserving the principles of free trade is about to come into play. In summary, citizens will be able to get accurate information about the average values in that region when buying and selling housing. This may bring balance to the unbalanced pricing practices due to the tight supply-demand balance currently experienced in the market.

The rapid and intense urban transformation projects that we hear about more frequently with the upcoming elections and the possibility of using public lands to produce accessible housing stock may be important determinants. There are also some programs published by the Ministry of Environment, Urbanization and Climate Change. Supporting contractors, providing financing and thus implementing projects are on the agenda. Finally, another important expectation that will affect the sector is that the 25% rent increase limit will be lifted in July.

In general terms, our general view in terms of 2024 expectations is that there will be a price increase in real estate in line with inflation. Of course, regulations that will significantly change market dynamics are on the agenda. If these happen, different scenarios will be possible. The price predictions for rental and sale houses on the trend screens created by Endeksa using big data analysis and artificial intelligence methods can also provide significant insight for those who want to make analysis.”

Source: Gayrimenkulhaber / Prepared by Irem Yildiz

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