Turkey has emerged as the leader in global house price growth, with its major cities Ankara and Istanbul experiencing unprecedented increases. This surge in real estate values comes amidst a backdrop of soaring inflation and economic challenges, drawing both domestic and international investors.
The Turkish capital, Ankara, has seen a staggering 102.7% growth in house prices, more than doubling within a year. Istanbul, the country’s cultural and economic hub, is not far behind with a 77.6% increase. These figures position Turkey’s major cities at the forefront of the world’s real estate market.
Turkish Inflation and Real Estate Investment
Currently grappling with rapid inflation, which stood at a significant 61.98% in November, Turkey’s economic landscape is complex. In such an environment, many Turkish citizens are turning to real estate as a means to preserve their wealth. This shift towards property investment is a direct response to the country’s high inflation rates.
Istanbul’s Appeal to Foreigners
Istanbul, in particular, has become a magnet for foreign investment. The city’s real estate market is especially popular among Russians, who are drawn to its unique blend of culture and economic opportunity. This international appeal underscores Istanbul’s position as a global city.
With the country’s interest rates currently at an eye-watering 42.5%, many buyers are left with no choice but to purchase properties outright with cash. This trend indicates a challenging borrowing environment, where high interest rates are a significant barrier to financing property investments through loans.
Global Real Estate Trends
Beyond Turkey, the global real estate scene is characterised by stretched affordability and high mortgage costs. Knight Frank’s analysis places most cities in this category, highlighting a common challenge faced worldwide in the property market.
London’s Market
In contrast to Turkey’s soaring prices, London ranks 78th out of 107 cities in terms of house price growth. The UK capital saw a -1.2% fall in house prices, indicating a different market dynamic compared to Turkey’s booming real estate sector.
Europe’s Struggle with Declining House Prices
In Europe, the situation is even more challenging. Cities like Stockholm, Sweden (-12%), Bratislava, Slovakia (-10.3%), and Frankfurt, Germany (-10.1%) are experiencing the most significant declines in house prices. This trend highlights the diverse and often contrasting real estate landscapes across different regions.
This dramatic growth in Turkey’s real estate market, particularly in Ankara and Istanbul, sets a new precedent in the global property scene. While it offers opportunities for wealth preservation and investment, it also poses challenges in terms of affordability and access, especially in a high-inflation and high-interest rate environment.