Real estate property rents across Turkey have increased over recent months amid strong demand – an environment that is also said to have paved the way for uncontrolled unilateral price hikes by landlords and real estate agents.
Rents for apartments throughout Turkey have soared an average of 55% over the last year, with increases reported to have reached 100% in some regions.
This is said to have been prompted by the lack of new apartments compared to high demand and the return of university students who mostly received distance education over the last year due to the coronavirus pandemic.
Hepsi Emlak, a leading real property website, has calculated that rental prices have increased more than 50% in one year in metropolis Istanbul’s 50 neighborhoods.
Add to this high construction costs and rising consumer prices, which have been in double digits for most of the last couple of years.
Annual inflation jumped to 19.25% in August, above the central bank’s policy rate and its highest level in more than two years.
The overall construction costs have increased by 44.76% year-on-year in July, according to the Turkish Statistical Institute (TurkStat).
Global house prices rise at fastest pace since 2005
All this is not specific to Turkey alone. According to property consultancy Knight Frank, global house prices are rising at their fastest pace since 2005 as low interest rates, a shortage of housing and bountiful household savings continue to boost the housing market.
The average annual price change across 55 countries rose to 9.2% in the 12 months to June, Knight Frank data showed. It is the fastest rise since the 12 months to March 2005, and is up from 4.3% over the same period last year.
Overall, one in three countries registered double-digit price growth, including Russia and Germany. The U.S., Australia, New Zealand, Turkey and Canada registered nominal house price growth of more than 16%, the data showed.
The Central Bank of the Republic of Turkey (CBRT) has said inflation should enter a falling trend in the fourth quarter.
Some recent reports have also claimed that real estate agencies have been contacting landlords to convince them to charge more so that their commission increases, too.
To rein in price increases, the government is said to be looking at a new renting model similar to that applied in some parts of Europe.
Members of Parliament are said to have conveyed the issue to the Treasury and Finance Ministry. An alternative suggestion package is being worked on and could be conveyed to President Recep Tayyip Erdoğan soon.
Efforts have reportedly been initiated to set up a framework that would allow construction firms to build houses for rent, a report in the Turkish Sabah daily said Tuesday. The study could eventually turn into legislation.
Houses for rent in some parts of Europe, as well as some Western nations, mostly belong to companies instead of individuals. Builders rent properties under contracts with citizens. Such an environment also shields citizens from being evicted from the apartment in a short time.
The latest study is said to be examining whether this model can be adapted to Turkey. Yet, there are certain issues ahead in terms of legislation and taxes that currently prevent contractors from renting out the houses they build, rather than selling them.
The aim of the study is to create legislation that will allow construction firms to build houses to rent.
Daily: Daily Sabah