The term “real estate bubble” raises concerns among many investors, especially when it comes to investing in Turkey, avoiding this concept is crucial to ensure the stability of the Turkish real estate market and protect your investments.
What is the Definition of a Real Estate Bubble?
It is a condition witnessed in the Turkish real estate market when property prices suddenly and irrationally exceed their true value, this excessive increase in prices is accompanied by a demand for properties that surpasses the available supply.
What are the Reasons for the Occurrence of a Real Estate Bubble in Turkey?
- Unexpected surge in demand for properties:
When the demand for properties increases suddenly without a balance between supply and demand, it leads to a rise in property prices in Turkey.
- Real estate loan policies:
The ease of obtaining real estate loans in Turkey makes property ownership easy and affordable, increasing the demand for properties and causing a real estate bubble.
- Global and local inflation:
The components of properties in Turkey, such as land and building materials, experience price hikes. Any increase in the price of these materials automatically raises property prices, especially for modern buildings compared to older ones.
- Media and its impact:
The media plays a significant role in exaggerating the real estate bubble and negative expectations about the Turkish real estate market.
- Rise in interest rates:
If Turkish authorities rapidly raise interest rates, it can reduce the ability to purchase properties in Turkey, leading to a decline in prices.
What are the Signs of a Real Estate Bubble?
The signs indicating the imminent occurrence of a real estate bubble include an increase in property prices, making property ownership unattainable for investors, and instances of unrealistic and unacceptable price inflation.
How to Avoid a Real Estate Bubble?
- Knowledge of the real estate market:
To avoid a real estate bubble, you must have complete knowledge of the real estate market in the area you intend to invest in. Conduct research on new prices, local market trends, and consult a real estate expert for valuable information to aid your investment.
- Budget determination:
Financial planning and determining your financial budget prevent borrowing for property purchases, as this could exert significant pressure on your financial budget in case of property price decreases.
- Diversify your real estate investments:
Diversifying your investments ensures the protection of your funds, meaning you should not rely solely on real estate as the sole means of investment.
- Monitor real estate market developments:
Keep track of developments in the Turkish market and pay attention to any unreasonable changes in prices. If you notice any signs of unjustified price increases, it may be the right time to sell some investments.
- Observe interest and tax rates in Turkey:
Continuous changes in tax and interest rates in Turkey affect your real estate investments, so monitoring these changes is essential to protect your investment.
Can What is Happening in the Turkish Real Estate Market be Considered a Real Estate Bubble?
In recent years, property prices in Turkey have experienced a significant increase, especially after the COVID-19 crisis and economic inflation, this led to a decrease in supply and an increase in demand, these price increases are considered normal, as the Turkish real estate market is vibrant, and the increasing demand for property ownership, both from the 85 million population and foreigners in Turkey, reinforces the idea that what is happening in the Turkish real estate market is not a real estate bubble.
Keywords:
Investing in Turkey
Property ownership
Foreigners in Turkey
Property prices in Turkey
