Istanbul Property Price Index: Predicted Changes to House Prices in 2023

Istanbul Property Price Index: Predicted Changes to House Prices in 2023

Turkish homes are in great demand among foreigners and Istanbul, the country's largest city, is particularly alluring. In 2022, record figures for the purchase of real estate by foreigners were seen in the metropolis, with prices soaring. Here is how the average home price in Istanbul will change by 2024.

Price Dynamics for Real Estate in Istanbul Since 2020

What can effect on Istanbul property market? Economic factors, both global and domestic, have a great impact on the real estate market. Turkey saw hyperinflation in 2022, surging to a record high of 85.51% in October, before dropping slightly to 64.2% by the end of the year. This affected Turkey property price index. Prices in some cities increased by 203% compared to 2021. 

In Istanbul housing market, they skyrocketed by 193.9%, to an average of $1432 per square metre. For comparison, the average price per square metre in Istanbul in 2020 was roughly $550 (adjusted for the lira exchange rate for 2020), and in 2021, it reached $1000 (at the rate as of the end of the year).

Photo: Svetlana Gumerova (Unsplash)

Whether changes in house prices in Turkey affect the number of sales? This significant increase in prices did not affect the total number of sales. Turkey recorded 1,485,622 residential real estate purchases in 2022, Istanbul leading with 259,654 units, based on figures released by TurkStat. Compared with the 2021 figures, this only amounted to a slight 0.4% drop in the total number of such sales in the country.

In 2022, foreign interest in Turkish homes increased by 15% compared to 2021. Interestingly, while the average share of foreign buyers is only 4.5% in the country, in Istanbul this figure is much higher, amounting to 17% of the total number of sales.

People from which countries are interested in Istanbul and Turkey real estate market? Russians, Persian Gulf nationals, Ukrainians, Kazakhs, and Germans accounted for most sales to foreign nationals in Turkey in 2022.

Rental Market Changes in Istanbul

What about rental property prices in Istanbul? Data presented in May 2023 by the deputy secretary general of Istanbul's city hall, Buğra Gökce, shows that rental prices in 15 areas highly sought-after by foreign residents have gone up by eight times compared to 2019. In 2022, Istanbul saw one of the biggest rental price growths in the world, it grew by 160% in 12 months. To illustrate, in May 2023, a one-bedroom apartment in the prestigious Beyoğlu district was available for rent for $1500, and a very thorough search could get you one for $1010.

After many areas of Turkey were closed for residence permit registration, the demand for long-term rentals among foreigners began to decline. Rental properties are still in high demand among Turkish citizens, so they have replaced expats in the closed areas. Yet the Istanbul rental property prices remain high.

Collet Avcılar (Housearch)

What Attracts Foreigners to Istanbul

Istanbul has always been a desirable place to live. It is the only metropolis on the planet which is located on two continents, in Europe and Asia. It successfully combines ancient Turkish culture with the amenities of modern large cities and a business lifestyle. Istanbul is the most popular Turkish city among expats from around the world. Among the advantages of Istanbul, foreigners note:

  • Good climate
  • Affordable housing prices compared to Europe
  • Welcoming locals

Another major reason for foreign interest is fairly accessible naturalisation. Turkey remains one of the few economically developed states that grants citizenship for the purchase of real estate.

Measures Implemented by the Turkish Government to Curb the Rise in Housing Prices

Hyperinflation, the influx of foreign residents and a number of other factors all account for soaring housing prices in Istanbul and throughout Turkey. The country experienced several waves of migration in 2022 and properties were snapped up by both locals and foreign nationals. Most purchases were made by investors seeking to make money on rent, since the demand for rental properties has increased significantly due to increasing numbers of expats.

To curb the influx of foreign nationals and protect the rights of the locals, the authorities have taken the following actions:

  1. A limit has been set on the number of areas where foreigners can obtain a residence permit. On July 1, 2022, the list of neighbourhoods closed for residence permits included 1169 Turkish districts, and the number of these neighbourhoods continues to grow. By October 2022, ten districts of Istanbul much loved by immigrants were closed to those who want to apply for Turkish residence permits.
  2. They have also changed the minimum value of real estate required to get a residence permit. For sparsely populated areas, the minimum is $50,000, and it is $75,000 for large cities.
  3. They have raised the threshold for the sum required for granting citizenship. You previously needed to buy property worth at least $250,000 to receive a Turkish passport, but since June 2022, the minimum amount has increased to $400,000.

Raising the threshold needed for citizenship has drawn the attention of many investors away from coastal areas and towards property in Istanbul because the cadastral value of housing in Istanbul is higher than in other parts of the country.

Photo: Ervo Rocks (Unsplash)

Housing Prices in Istanbul in 2023

Data provided by the Endeksa real estate valuation platform indicates that residential property prices in April 2023 were up by 132% compared to prices one year previously.  

To give you an idea of the starting prices for properties in different districts of Istanbul as of June 2023, we have prepared the following table:
Istanbul District
Price for one-bedroom apartments (primary market)
From $150 000
From $70 000
From $150 000
From $170 000
From $150 000
From $130 000
From $70 000

Tersane İstanbul (Housearch)

Will Istanbul Real Estate Prices Continue to Rise?

So, how will change the average house price in Istanbul, Turkey? According to the Turkish Institute of Statistics (TUIK), there were 36% fewer sales completed in Turkey in April 2023 compared to April 2022. Istanbul accounted for 16% of all April purchases out of 85,652 total sales. With the declining demand, the city remained the largest in the Turkish real estate market.

The drop in demand is not only due to changes in migration legislation and increased prices. The Turkish presidential elections also served as a deterrent to property purchases by foreign nationals in the first four months of 2023. Experts described this as a "standstill period."

The main concern among foreign investors was caused by the election promise of Recep Erdoğan's main opponent. Kemal Kılıçdaroğlu proposed to ban the sale of property to foreigners for at least five years until housing prices fall. The reason for this initiative was the large influx of foreigners to Antalya and some areas of Istanbul.

Recep Erdoğan won the election and this outcome signalled to foreign investors that there would not be major legislative changes for migrants and that Turkey would remain an inviting destination. We can therefore expect a new spike in foreign demand for real estate and a new impetus for price growth in the second half of 2023.

What should we expect from the real estate market in Istanbul? Experts expect Istanbul's real estate prices to increase by 30% to 50%. There are a number of reasons for this prediction:

  • The lira continues to weaken against the US dollar and the price of construction supplies is going up.
  • Istanbul continues to close its neighbourhoods to residence permit applicants. Prices for buying and renting property are rising in the districts open to applicants.
  • The central areas of the city are almost full. Prices for new properties there are growing because demand exceeds supply.
  • After a large-scale earthquake that hit Turkey in February 2023, the demand for new earthquake-resistant buildings in Istanbul has increased. Apartments in such structures are becoming much more expensive.

Photo: Osman Köycü (Unsplash)

Benefits for Buyers of Real Estate in Istanbul

Investors have two main ways of making money on real estate investments in Istanbul:

  1. Resale yield. If you buy a unit at the excavation stage and sell it after completion, you can earn up to 15% of the cost. Those who opt for this strategy carefully choose the location, study the development plans for the district and the projects of competitors. The districts of Beylikdüzü, Üsküdar and Kadıköy are popular with investors who make money on resales as they show the greatest surge in housing prices.
  2. Passive income from renting properties. Istanbul attracts a lot of tourists and expats, so it is not difficult to find tenants. The payback period of local housing is approximately 13 to 15 years.
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In a Nutshell

So, what happens with Turkey real estate prices? Turkey’s property price index is increasing. It reached peak values in 2022, going up by 203% in some regions compared to the previous year's figures. The main factors contributing to soaring prices were hyperinflation and a large influx of foreign nationals. Experts forecast that by the end of 2023, residential property prices in Istanbul will increase, but not as drastically as in 2022. Average house price in Turkey is not expected to fall, especially in Istanbul, the most desirable city among foreign nationals.

Cover photo: Jack Krier (Unsplash)

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