Turkey to face soaring rents as house price index jumps 110%

Turkey’s Residential Property Price Index (RPPI) continued to move north and jumped 110% annually in March in nominal terms, according to official data.

The climb preceded a key meeting between government officials, which would discuss soaring rents in the country.

The surge comes amid rising inflation, which hit a 20-year high of almost 70% in April, propelled by rising energy and commodity prices.

Measuring changes in quality-adjusted home prices, the index jumped 96.4% annually in February. The increase was 77.5% in January and 59.7% in December. Almost a year ago, the index’s annual increase was 32%.

The March RPPI rose 29.7% in real terms over the year and 13.5% from the previous month, the Central Bank of the Republic of Turkey (CBRT) said on Monday.

Soaring prices and rents set off alarm bells, and the government pledged to act. President Recep Tayyip Erdoğan earlier this month announced several measures to deal with soaring property prices as residents struggle to find affordable homes to rent or buy.

Officials from the Ministry of Environment, Planning and Climate Change, the Ministry of Justice and the Ministry of Treasury and Finance are due to meet later on Tuesday to discuss possible arrangements to deal with the outbreak. rents.

In the country’s largest city, Istanbul, home to around a fifth of Turkey’s population of 85 million, the index has climbed 122% over the year. Month-over-month, it was up 9.8%, the data showed.

The gauge increased by 111.7% and 105.9% on an annual basis in the capital Ankara and the Aegean province of Izmir. On a monthly basis, it jumped 9.6% and 10.6% in the two cities, respectively.

According to the Turkish Statistical Institute (TurkStat), average rents – which began to soar across the country in December after a sharp drop in the Turkish lira – rose 19.7% year-on-year in March.

The construction index climbed 102% year-over-year in March, according to data from TurkStat.

Despite high borrowing costs and soaring prices, residential property sales in Turkey rose nearly 40% year-on-year in April, according to the statistical body, as households continue to consider real estate as an attractive investment tool to hedge against inflation.

Home sales rose 38.8% in April to 133,058 units from 95,863 a year ago, marking an all-time high for the month. It followed March’s highest figure so far, with sales hitting 134,170, a 20.6% year-on-year increase.

January-April sales rose 26.2% to 453,121 homes.

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Sharon P. Juarez