Turkey's Central Bank governor reveals living with mother due to exorbitant rental prices in İstanbul

Hafize Gaye Erkan, the governor of the Central Bank of Turkey, disclosed that she and her family are currently residing with her parents due to the excessively high rental prices in İstanbul. 

“How can İstanbul be more expensive than Manhattan? We couldn't find a place in İstanbul. It's tremendously expensive. We moved in with my mother; we stay with them,” Erkan told the pro-government daily Hürriyet in an interview published today.

Following her appointment in June, Erkan, married with a child, relocated from the US, where she had lived and worked in the finance sector for over 20 years. Her revelation sparked skepticism on social media, with many questioning how, despite her substantial Central Bank governor salary and a lucrative career in finance in the US, she claimed inability to afford a rental property in İstanbul. 

While the Central Bank doesn't disclose the specific salary of its governor, the available data indicates that Erkan could easily rent a home in an upper class district of İstanbul.

The Central Bank governor's monthly gross salary was about 160,000 liras in 2022, according to a calculation based on the cumulative payments made to the 15 top executives of the bank, as indicated in the bank's 2022 activity report. This amount reached 268,000 liras (~9,225 dollars in today's exchange rate) with additional benefits. In 2023, public employee salaries saw increases ranging from 50% to 85%. 

Erkan's comparison of rental prices between Manhattan and İstanbul also seems to be inaccurate. Data from the Zumper real estate site shows that the average rent for a 1-bedroom apartment in Manhattan, NY, was 4,215 dollars as of December 2023, marking a 7% increase from the previous year. 

Comparatively, the average rent in İstanbul, according to Endeksa, stood at 16,163 lira, or 689 dollars, based on the exchange rate on June 9, the date of Erkan’s appointment. In İstanbul's three most expensive districts, the average rental price was 45,671 liras (1,638 dollars) in Sarıyer, 39,387 liras in Beşiktaş (1,326 dollars), and 36,500 liras (1,555 dollars) in Kadıköy. 

"Ten person should own one house"

In the interview, Erkan attributed the steep increase in housing prices to a shortage of supply and inexpensive financing. She said, "The most significant issue we face is the lack of social housing. Due to the shortage of social housing, there is an increase in rents.

“Moreover, there is a specific increase in rents unique to Turkey. Our President and Vice President also emphasize this issue. A person should not own ten houses. Ten people should own one house.” 

This suggestion also drew criticism on social media. One X user wrote, "We, as a family of five with three children, are looking for five people to buy a house together. (Families are preferred)."

Another user wrote, "Ten people (about three families) can come together to rent a house. For purchase, however, 60 people should come together." 

Another wrote, "Should 10 people sleep in each other's arme in one house, or should this house be a mansion?"

Turkey's housing crisis: Citizens faced with landlord violence and unmet basic needs amid government inaction

11 December 2023

In recent years, housing prices saw an unprecedented increase in Turkey, with rental prices tripling in two years. The IMF housing prices index shows Turkey is significantly ahead of other countries in real increases. 

The surge in housing and rental prices is attributed to rising construction costs due to high inflation, declining purchasing power, the low-interest rate policy implemented by the government after 2019, and real estate sales to foreigners.

Erkan's appointment as the Central Bank governor was perceived as part of the government's willingness to implement a more orthodox fiscal policy following the May elections.

In the previous four years, the government implemented a low interest rate policy in accordance with President Recep Tayyip Erdoğan's unconventional belief that elevated interest rates lead to increased inflation. Since June, the Central Bank has raised the policy rate from 8.50% to 40%. (VK)