August is interesting for investors because this month there are statistics for the first half of the year for all markets, including real estate. Statistics allow us to sum up the results of the first six months and assess the prospects for the second half of the year.

Expert Property Agency is not just a realtor or broker – we work as an international investment company that works with the most profitable assets, where real estate is in the lead, as well as trade, the agricultural sector, etc.

We do not just provide our clients with comfortable housing – we introduce compatriots from the CIS into the Turkish economic and legal system, providing all the opportunities so that everyone can get the maximum profit with minimal risks.

Since we always focus on transparency and customer awareness, today I will talk about real estate trends over the past six months. Thanks to this, dear reader, it will be easier for you to decide whether it is worth investing in magnificent Turkey.

The first results of “normalization”

After the 2020 lockdown, Turkey’s economy was severely affected. Even purely psychologically, this period was very difficult to endure – the curfew in peacetime was simply shocking. However, at the beginning of this year, the country’s authorities began to bring the country out of lockdown, and in June they introduced a policy of “normalization” – the economy, public life and in general all spheres.

The results of June, partly July (there are no complete data for July yet) and the first half of the year as a whole are optimally suited in order to evaluate the results of this “normalization” and make forecasts for the near future. I would like to note that the real estate market is a key indicator of the ” health” of any economy and the mood of both residents of the country and foreign investors.

So, for the period from January to June, 552,810 transactions were recorded in the field of residential real estate. This is 11.5% less than in the same period in 2020 (the first months of last year were even before quarantine). But there is an important nuance – most of the transactions in 2021 were made in just two months, in May-June, while the rest of the time growth was restrained by quarantine. If you look at the months, then in the spring and summer of 2021 there is simply an explosive increase in sales.

Thus, in June, state statistical bodies reported 134,731 housing transactions, which is 127% higher than in May. In numerical terms, this is the highest figure in the last 9 months. There are already preliminary data for July – 107,785 units, which is significantly lower than in June.

Why is that? The fact is that in June the factor of deferred demand was strong, and in July the market began to calm down, which in my opinion is positive. The strongest explosive demand provoked a rapid rise in real estate prices, which could threaten the market with a “financial bubble”. In my opinion, it is better to let the price increase be less, but more stable – and we see that the situation is gradually returning to normal, calming down.

The devaluation of the lira and the desire to “land” capital

The second factor that accelerated demand in June was the devaluation of the Turkish lira. Local investors began to massively buy up the most liquid housing and other assets in order to fix their ” stash” in the Turkish lira and, thus, protect capital from further inflation.

Interestingly, investors fear the devaluation of not only the lira, but also the US dollar – according to the Turkish Banking Regulation and Supervision Agency, individual accounts of citizens in June decreased by $ 2.4 billion: from $ 161 billion 964 million to $ 159 billion 564 million. Money was massively withdrawn, including to pay for real estate transactions.

However, in July, the contradictory mood in the local financial markets became calmer, the economy showed high growth rates and everything returned to its track. “Normalization” has yielded results, returning optimism and peace of mind to investors – albeit temporarily, because in the fall everyone is waiting for the next onset of the coronavirus. However, this time the country will be much better prepared and this infection should not have such a detrimental effect on the economy.

Speaking of prices, according to REIDIN-GYODER, real estate prices in Turkey have increased by 29.12% over the past 12 months. On average, one square meter “grew” from 2187 to 2839 Turkish liras. What is even more interesting is that the highest dynamics are shown by provincial locations, where villas and country houses are located, for which there was the greatest demand during the quarantine period.

Thus, the largest price increase was recorded in the province of Aydin (59%), and the smallest in Istanbul and Izmir (30%). Antalya is located in the center of the list with a dynamics of + 40%. As you can see, the largest increase is where housing used to be cheap and was not in great demand. But housing in large cities is not growing so actively – simply because there and before that the price tags were rather big.

Mortgage vs installment plan

Another interesting trend was the gradual decline in the share of mortgages and the parallel growth of installments, as well as cash payments – without banks. For example, 28,878 such loans were issued in June, and only 20,553 in July, of which almost a quarter were in Istanbul. The decline for the month was 11.6%. If we compare the first half of the year with the same period in 2020, the difference will be even more noticeable – the decline was 60.9%.

Demand for mortgages falls throughout the year, which forces banks to reduce rates. However, not too actively – the average mortgage rate fell from 18.61 % per annum in January to 17.84% in July. The dynamics of August shows that most likely the annual rates will continue to decline. For cash or with the help of bills for the first half of the year, 448,642 transactions were purchased, while mortgages were taken only 104,168 times. This very eloquently demonstrates the attitude of the Turks towards banks.

The second reason is that developers are increasingly offering interest-free installments, “knocking down” bank rates and making mortgages uncompetitive. The average period for which it is now possible to arrange an installment plan with a construction company in Turkey has grown to 4 years. Although a couple of years ago, installments of more than 18 months were considered rare.

This trend is also spurred by the introduction of the mentioned promissory notes (IOUs), which can be paid in the same way as in cash. They were recently allowed in Turkey for the purchase of assets, but are becoming increasingly popular as a more convenient alternative to bank lending.

However, there is also a negative trend – due to the high demand for installments, developers are beginning to gradually increase the size of the down payment, demanding more and more 60% or more of the cost of housing. Promissory notes for the missing amount just help to cover the appetites of developers.

In general, the summer very clearly showed that the Turks do not really trust the banking system. Once again, I am convinced that the introduction of sales through smart contracts and cryptocurrencies in our company was a very correct and timely decision.

Preliminary results

The dynamics of the real estate market shows that the country is emerging from the crisis and inspires some optimism. The main conclusion will be this: the authorities, ordinary citizens, and business have already become accustomed to the new realities of the coronavirus era. Everyone is set up for the active growth of both the Turkish economy as a whole and the profitability of real estate specifically.

We see in Turkey both global trends, such as the flight of wealthy citizens from densely populated cities to comfortable cottage settlements, and purely Turkish ones, such as the fear of further devaluation of the lira. We also see a request for an alternative to banking services in the P2P format (“to each other”, without intermediaries), among which promissory notes and the same cryptocurrencies are in the lead.

In the second part of the review for investors, I will talk directly about the foreign segment of the real estate market – what are the trends and tendencies, how much an investor can earn on renting housing and in which cities it is most profitable to do it. Don’t miss it!

Yours Tatiana Güneş