The real decline in housing prices has been ongoing for 8 months.

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While the real decline in housing prices has continued for 8 months, investors who see this as an opportunity continue to purchase housing despite high interest rates.

In order to monitor the price changes of housing in Turkey, adjusted for quality effects, the Housing Price Index (HPI/2023=100) calculated by the Central Bank of the Republic of Turkey increased by 1% in September compared to the previous month, reaching 148. The HPI increased by 27.4% year-on-year in September, while the real decline during this period was 14.7%. Thus, the process of real decline that started in February continued into the 8th month.

THE LAST INCREASE IN PRICES WAS IN JANUARY

"DIVERSIFICATION OF PORTFOLIOS AND REAL PRICE DECLINE INCREASED SALES"

Real estate economist Ahmet Büyükduman stated in his evaluation that as long as a real interest rate above inflation continues to be provided, the decline in housing prices will persist. Emphasizing that the real decline in housing prices is an opportunity for investors, Büyükduman made the following assessments: The gross rental multipliers have already dropped to around 15 years. The amortization period for housing had risen to an average of over 20 years. This figure has now fallen back to around 15 years. We have returned to the rental/price ratio of 20 years ago. Rents show a very good ratio compared to housing prices. Therefore, we can say that 'there is an investment opportunity in real estate.' The highest sales figures in the last 21 months in September also came about thanks to this. Investors who earn money mostly from gold, who have turned to Currency Protected Turkish Lira Deposits and Participation Accounts, and who think 'interest rates may fall and housing prices may rise' have increased sales through portfolio diversification. Along with the decline in real prices, portfolio diversification has been effective in increasing housing sales."

Ahmet Büyükduman noted that housing sales have been increasing for the last 3 months, stating, "In fact, we see that those who want to make purchases for rental income are also turning to housing purchases. Housing has regained attractiveness at the current rental multiplier level." he said.

"A FURTHER DECREASE IN REAL HOUSING PRICES WILL NOT BE A SURPRISE"

Prof. Dr. Sefer Şener, a faculty member at Istanbul University Faculty of Economics, also conveyed that there has been a contraction in housing supply worldwide due to the COVID-19 pandemic, stating that after this rapid contraction, there was a rapid increase in housing prices and rents, which also brought serious pressure on inflation.

"PRICES ARE STILL VERY HIGH"

Şener explained that the rapid construction and delivery of housing in provinces affected by the recent earthquakes centered in Kahramanmaraş, the recent imposition of an upper limit on rents, and the rapid increase in interest rates due to the new economic program have led to a decrease in demand for housing, using the following expressions: When the increase in housing supply is added to this situation, the increase in prices has slowed down. The decline in prices indicates that it is a suitable time to buy housing with previously made savings. However, the desired decline for purchasing mortgaged housing has not yet reached a sufficient level. Because both costs and increasing demand and insufficient supply have kept housing prices still quite high worldwide. The pandemic, costs, earthquakes, and supply shortages have led to excessive increases in housing prices. Therefore, it will not be a surprise if real housing prices decrease for a while longer with the increase in supply and the slowdown of inflation."

"INVESTORS MUST READ MARKET UPS AND DOWNS CORRECTLY"

Neşecan Çekici, President of the Association of Real Estate Investors (GYODER), also stated that until a year ago, the negative real interest rate policy applied recently had significantly reduced housing loan interest rates, making the following evaluations:

"This decline has caused investors to turn back to housing purchases. This trend has continued to grow, and in 2022, an extraordinary increase of 170% year-on-year was observed in housing prices. In the years 2020-2022, housing sales settled just below the level of 1.5 million units annually. However, in 2023, housing sales have decreased.

WHEN SALES DECREASE, PRICES ALSO FALL

"It is a fact that the low trend in sales has caused a real decline in housing prices. Nowadays, low housing sales figures are associated with difficulties in accessing financing and purchasing power issues. It is anticipated that if these difficulties decrease or completely disappear, interest in real estate investments will increase again, which will create upward pressure on housing prices."

"REAL ESTATE IS BOTH A SHELTER AND AN INVESTMENT TOOL"

Noting that real estate has always been one of the most preferred investment tools in Turkey, Çekici stated, "Housing investments are considered not only to meet shelter needs but also as a savings product, life insurance, and a financial investment tool. It is important to be conscious when investing in this area. By reading market ups and downs correctly, making investment decisions within the framework of the most suitable time and market conditions will yield profits in the long run."