Renters across Turkey, have long complained over the skyrocketing rent fees in the housing market. Though there has been a marginal decline according to a December market analysis by Bahcesehir University Center for Economic and Social Research (BETAM), the high inflation, declining purchasing power, and other factors continue to make it difficult for average income earners to find suitable housing.
In June 2022, to address the rising housing costs, the state introduced 25 percent cap on rent hikes. However, that barely resolved the issue. According to Bloomberg, “Landlords began demanding exorbitant rents to offset the 25 percent limit as annual inflation surged over 85 percent.”
Buy/sell, rent/lease residential &
commercials real estate properties.
With Turks living in major cities facing an average rent cost exceeding 79 percent of the minimum wage (at the time of writing this story, the minimum wage in Turkey is TRY 11,402, USD 391), it was surprising to hear that the head of Turkey’s Central Bank, Hafize Gaye Erkan, also struggled and as a result, moved in with her mother.
Erkan told Hürriyet newspaper she was surprised to see that Istanbul was more expensive than Manhattan, New York, which is where the Central Bank governor lived prior to moving to Turkey and taking over the job as the new head of the bank in June 2023. “We could not find a flat in Istanbul. It’s very expensive. So we moved in with my mom,” Erkan told the newspaper.
According to housing price data from the Organisation for Economic Co-operation and Development (OECD), Turkey is at the top of OECD countries both in terms of rent and housing prices. There are a number of reasons that explain the surge. According to the Economic Policy Research Foundation (TEPAV) report released in August 2023, the two earthquakes that hit the country’s southeastern provinces in February led to an influx of renters into Turkey’s cities.
The fiscal crisis was also exacerbated by the state’s unorthodox approach to interest rates — setting the rates low in order to keep growth strong. The rapid escalation of construction costs as a result of inflation — the highest the country has seen since the 1990s. High inflation also contributed to currency depreciation, which also had an impact on price hikes. The lax regulation of real estate sales to foreigners since 2012 also drove the demand higher.
Similarly, in its most recent Global House Price Index quarterly report by an international real estate consultancy firm Knight Frank, which evaluates the housing market of over 50 countries, Turkey was leading in the category of “the strongest growth on our ranking with an annual (89.2 percent) and quarterly (18.1 percent) increase” in house prices.
In cities like Istanbul, the issue is not that there are no available properties to rent. In fact, according to the İstanbul Planning Institute (İPA), there are hundreds of thousands of empty apartment units unoccupied in the city. In an interview with Turkey Recap, a researcher at İPA, Özge Tekçe, explained that “one reason for the high number of unoccupied residences is that some people purchase second or third homes, which they purposefully leave empty for a variety of reasons, including investment purposes and economic instability.”
There is also the issue of available, affordable housing in the market. “There is no accessible housing distribution for everyone. This is actually the main problem in İstanbul,” Tekçe told Turkey Recap.
The “ossifying dynamics” of high inflation, according to economist Mustafa Sonmez include a Turkish economy that is heavily dependent on imports, foreign investors who are wary of Turkey’s increasing instability, and a constantly depreciating national currency. As such, the continuing surge in real estate costs in Turkey is unsurprising. That, and the fact that Turkey’s construction industry relies heavily on imported construction materials that have seen an unprecedented price increase only exacerbates the problem.
Bloomberg reported year-on-year inflation exceeded 60% in December 2023.
Meanwhile, the revelations by the head of the Central Bank about moving in with her mother have left many scratching their heads. Especially in light of an estimated salary Erkan is receiving, the numbers simply don’t add up, wrote journalist Volga Kuscuoglu for Bianet. “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,” wrote Kuscuoglu. Not to mention the comparison in rent costs between Istanbul and Manhattan, “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. In İstanbul’s three most expensive districts, the average rental price was TRY 45,671 (USD 1,638) in Sarıyer, TRY 39,387 in Beşiktaş (USD 1,326), and TRY 36,500 (USD 1,555) in Kadıköy.
Then, on December 19, Yavuz Alatan, another reporter from a local newspaper Sozcu, claimed that the governor already had a place, the rent for which was covered by the Central Bank, except Erkan did not find it suitable for living with her child.
As speculations over Erkan’s interview continue, so does the housing crisis and soaring rent fees for low and middle-income class Turks.