Izmir, Mugla, Antalya Are In The First Place... What Happened To House Prices?
HOUSE PRICES ARE ON THE RISE AROUND THE WORLD
Turkey is also one of the countries experiencing the increase. What does this mean? We asked your expert…
House prices have shown a record rise during the pandemic, especially in developed and developing countries. "Will it be a new balloon?" in raising the question, the Wall Street Journal, an economic newspaper, discussed the increase in house prices from Amsterdam to Auckland in an assessment published by the United States, Canada, European and Asian countries.
According to the report, prices in 37 countries that are members of the Organization for Economic Co-operation and Development (OECD), including Turkey, rose by a record in the third quarter of 2020. The average increase in house prices in these countries was 5 percent. That was the highest level in 20 years.
According to experts, the increase is due to the economic support packages announced as part of the fight against Covid-19 in many countries, as well as the change in purchasing styles as more people start working from home.
DENMARK TO SOUTH KOREA
Examples in the news reveal similar trends in very different geographies.
For example, Deputy Governor of the Danish central bank, said the increase was 5 to 10 percent relative to the market, while in the Chinese city of Shenzen, house prices rose 16 percent. In New Zealand, house prices rose 23 per cent in February 2021 compared with a year earlier. Similar increases were recorded in Sydney.
According to analysts house prices in the Netherlands, which rose 6.9 percent in 2019, are also up 7.8 percent in 2020. Bank of Canada said in February that prices had risen 17 percent in a year. In Seoul, however, the increase reached 15 percent at one point last year.
A similar picture is taking place in the US, but economists quoted by The Wall Street Journal say there is no reason to worry. Economists, who said that the credit score of those who bought homes this time compared to previous examples, is higher, see the likelihood of a global crisis and recession similar to that of 2008. According to experts, the growth this time is not due to speculation, but to an increase in demand. The most important factor in this is the increase in the interest of families in large houses with gardens outside the city with the spread of working from home.
According to the news, rising house prices also lead to homeowners feeling wealthier, resulting in more spending and construction, that is, increased supply.
IZMIR WAS SECOND IN THE WORLD
So, what is the situation in Turkey? According to the third quarter results of the 2020 global house price index, released in January, Izmir, Ankara and Istanbul homes ranked 2nd, 3rd and 4th among 150 cities in price growth. According to the index, the increase in Izmir was 27.8 percent, the increase in Ankara homes was 27.2 percent, and the increase in Istanbul was 25.7 percent. Despite rising prices, there was also a record number of house sales in Turkey in 2020. According to last year 1 million 499 thousand 316 people owned homes, while the historical record in 2017 exceeded 1 million 409 thousand.
So, how should we interpret the growth trend in house prices in Turkey? Can we draw parallels between the factors that affect us and the causes of increase in the world? What should we link the rise of house prices, especially in Izmir?
We asked all these questions to Turkish iClassified Real Estate who said that the increase in Turkey is mainly due to a decrease in supply and an increase in construction costs, while the increase in Izmir, as well as provinces along the Aegean-Mediterranean coastline such as Antalya and Muğla, can be explained by new living and working conditions caused by the pandemic and stressed that the increase in these cities also pushed up the national averages.
NON-RESIDENTIAL REAL ESTATE IS ALSO ON THE RISE
Turkish iClassified, who recalled that prices are formed due to the supply-demand relationship in the market, said: “in the last two years in Turkey, there is a weakness on the supply side. Because new construction is not enough, prices tend to rise due to demographic demand, but we should not ignore the increase in construction costs. Construction costs have risen by 30 per cent in the past year. During the same period, house prices also rose by 30 percent,” was said.
SO HOW DO PRICES AFFECT OVERALL SALES?
According to Turkish iClassified, it is necessary to make the separation of Housing and non-housing here:
“Turkey homes sales that are not related to credit fluctuate around their relatively long-term average, while mortgage sales have declined due to interest rates. Therefore, there is a decline in total home sales.
Sales of land, fields, vineyards, gardens and other built real estate, which we call non-residential, are increasing compared to previous years. Probably, those who want to move away from the impact of the epidemic must have turned to Real Estate in temperate regions that still have land-field qualities, but contain housing in them.”
PANDEMIC BLOWS UP IZMIR, MUĞLA, ANTALYA
Turkish iClassified agency also explained the increase in demand in temperate regions, especially Izmir homes, underlined by the following words:
“The spread of remote working practice due to the pandemic has increased interest in Izmir, whose access to Istanbul has been shortened due to the new highway. In addition to access and climatic conditions, we can say that the social fabric of the city is also effective. But Izmir is not alone in the price increase. Muğla homes and Antalya homes are also affected by price increases due to their temperate climate characteristics. In the last year, price increases in these two provinces reached 43 percent.”
Is it possible to say that the demand for rental housing has increased in parallel with the increase in house sale prices? Turkish iClassified, stating that the opposite is true, “the increase in Turkey rentals is a more concrete indicator of the demand for space. In cases where the demand for space is not met, first rents and then house prices increase. But house prices in Turkey can also rise without an increase in rents due to the ease of financing,” was said.