Turkey maintains rent increase cap, housing sales decline amid exorbitant prices

Photo: AA

Amid the continuing surge in rent prices across Turkey, parliament has extended a regulation that limits rent increases to 25% until July 1, 2024, in an effort to address the issue.

The rental market has witnessed soaring prices in recent years, prompting the introduction of the 25% cap in mid-2022. However, this measure only applies to existing lease agreements, leaving newly rented properties unaffected by the regulation.

According to a study conducted by Bahçeşehir University's Center for Economic and Social Research (BETAM), rental prices in Turkey experienced a staggering 101% increase in May compared to the same period last year. The rise was particularly pronounced in major cities. İstanbul saw a 109% surge in rental prices, while İzmir experienced a 150% increase, and Ankara recorded a 192% hike.

The skyrocketing rental prices have raised concerns, with many tenants struggling to find affordable housing options. The issue has been further compounded by a decline in housing sales across the country.

Increase in eviction cases

The situation has prompted concerns among both tenants and policymakers. Buğra Gökce, Deputy Secretary-General of the İstanbul Metropolitan Municipality (İBB), highlighted the escalating number of eviction cases, which have risen by 47% in the past two years.

Gökce noted that landlords, because of the 25% increase limit, are seeking new tenants willing to pay higher rents, contributing to the mounting housing affordability challenges.

Decline in housing sales

According to data released by the Turkish Statistical Institute (TurkStat), housing sales in June dropped by a significant 44.4% compared to the same month last year, reaching a total of 83,636 transactions.

The impact of these trends is felt most acutely in İstanbul, where housing prices have risen by 16.5% from January to May 2023. Certain districts within the city experienced even higher increases, such as Arnavutköy with 28.1%, Şile with 31.7%, and Çatalca exceeding 33%.

The main reason for the decline in housing sales is the increase in prices. According to the latest housing price index from the Central Bank, housing prices in April increased by 121.25% compared to the same period the previous year. Notably, this represents the lowest annual increase in housing prices since March 2022. The real increase during the same period was calculated to be 53%.

In April, there was a monthly increase of 4.67% in housing prices. According to the data, the average price per square meter in Turkey reached 22,841 lira (1 US dollar = 26.01 Turkish lira).

Housing sales to foreigners

Meanwhile, housing sales to foreigners have also declined. In June, there was a 69.6% drop in housing purchases by non-Turkish citizens compared to the previous year. Antalya emerged as the top destination for foreign buyers, with 1,004 properties sold, followed by Istanbul with 760 units and Mersin with 223 units. From January to June, housing sales to foreigners decreased by 45.5% compared to the same period last year, totaling 19,275 units. (VK)