Decline continues in prices of homes for sale and rent

sahibinden.com, in cooperation with Bahçeşehir University Center for Economic and Social Research (BETAM), prepared the "sahibindex Rental and Sales Housing Market Outlook" February report, which examined changes in the rental and sales housing markets. According to the report, the decline in real sales prices has continued for 8 months. These prices have fallen 12.1% nationwide compared to the previous year and 14.6% in Istanbul. When examining the rate of increase in current housing prices, it declined by 8.8 points compared to January, falling to 46.9% nationwide.

Decline in real housing prices continues

The decline shown by the national real housing price index, which had been continuously increasing since May 2020, continued through July 2023 into February 2024 (Figure 1). The real housing price index declined by 4.2 points in February compared to January, reaching 173.5. While the inflation rate from January to February was approximately 4.5%, current housing price increases across Turkey remained at 2.1% in the same period. Since current housing prices have systematically remained below inflation in recent months, real prices are declining.

Decline in real sales prices continues in the three major cities

As in the previous 7 months, real housing sales prices declined in the three major cities in February as well (Figure 2). From January to February, real housing prices fell by 4 points in Istanbul, 3.2 points in Ankara, and 4 points in Izmir. In February, the real housing price index was 170.3 in Istanbul, 195.7 in Ankara, and 177.6 in Izmir.

Year-on-year change in real prices remains negative

The annual real price increase, which reached 65.8% in August 2022, began declining rapidly from September 2022 onwards. The annual real price, which temporarily increased in February 2023 due to the major earthquake, began declining again from March onwards, and the annual price change rate in February 2024 declined by 6.5 points compared to January 2024, continuing in negative territory at -12.1% (Figure 3).

Rise in housing supply following previous decline

The number of listings increased nationwide and in the three major cities from January to February. Sales housing supply rose 3.2% nationwide, 3.6% in Ankara, and 4.4% in Izmir compared to the previous month. The increase in Istanbul was lower at 1.8% compared to other major cities (Figure 4).

Rise in housing demand continues

Housing demand, which showed a sharp decline following the earthquake in February 2023, fell until November after the increase in July. However, housing demand resumed an upward trend in December and rose 5.8% in February compared to January, reaching 114.2. Nevertheless, housing demand is 19.5% lower compared to February of the previous year (Figure 5).

Year-on-year real rent growth turned negative

Year-on-year increases in real rent adjusted for inflation have been declining for a long time nationwide. Excluding an exceptional increase from May to June, the year-on-year average real rent increase peaked at 86.6% in February 2023 and then began to decline, falling to 9.5% with a 4-point decline from December to January. In February, an average real rent decline of 1.1% was observed (Figure 6). With this decline, the average real rent in February 2024 fell below February 2023.

Signs of pause in rental housing supply decline

Signs of a pause are observed in the number of rental housing listings that declined nationwide and in the three major cities during October-December 2023 in January 2024. In February, listing numbers declined in both Turkey and Istanbul and Ankara. From January 2024 to February 2024, listing numbers fell 1.4% nationwide, 3% in Istanbul, and 2.4% in Ankara. In Izmir, listing numbers increased 3.2% (Figure 7). An important characteristic of demand in the rental housing market is its susceptibility to seasonal effects. Increasing demand between April and September declines in the following months and follows a relatively stagnant trend in winter months. In this increase in rental housing demand during spring and summer, the effect of those transferred to other cities for work and university students can be considered significant. Therefore, when interpreting changes in demand indicators, seasonal effects should be taken into account. The rental housing demand indicator fell between August and November, rose somewhat in December and January. In February, demand remained virtually unchanged. The rental housing demand index increased 0.1% from January to February. On an annual basis, there is a 25% decline in rental housing demand.