Sahibindex: Rental Prices Continue to Decline
In the "sahibindex Rental and Sale Housing Market Outlook" report prepared in collaboration with Bahçeşehir University Economic and Societal Research Center (BETAM), changes in the rental and sale housing market in October were analyzed.
According to the report, since the rate of increase in current housing prices across the country and in three major cities was lower than the inflation rate from September to October, real (inflation-adjusted) sale prices decreased both nationwide and in the three major cities. The annual change rate of real prices in September was -17.9% nationwide; in Istanbul, it was -18.5%; in Ankara, it was -16.1%; and in İzmir, it was -14.8%. However, when examining current prices, it was observed that the yearly increase continued compared to the previous year. The annual increase rate of current prices rose by 0.3 percentage points nationwide compared to September, reaching 21.9%. Accordingly, the average selling price per square meter for housing listings across Turkey was 31,097 TL. The annual increase rates for current prices per square meter of housing listings also rose in all three major cities, calculated at 21% in Istanbul, 24.7% in Ankara, and 26.7% in İzmir. The average sale price per square meter for housing reached 42,529 TL in Istanbul, 24,045 TL in Ankara, and 36,538 TL in İzmir.
The decline in real housing prices continues The real housing price index (2017=100), which had been continuously increasing across the country since May 2020, has shown a decline since July 2023 and this trend continued in October 2024. In October, the real housing price index decreased by 1 point compared to September to stand at 158.9. The inflation rate from September to October was higher than the current housing price increase rate (2.9% and 2.2%, respectively). Since current housing prices have systematically remained below inflation for the past year, real prices are decreasing.
Increase in the real sale price index in Ankara, decline in Istanbul and İzmir The real sale price index for housing, which had been decreasing in the past year in three major cities, continued its decline in October following a drop in September. From September to October, the real housing price index decreased by 1.2 points in Istanbul and by 0.6 points in İzmir. In Ankara, however, the real housing price index increased by 1.6 points. In October, the real housing price index (September 2017=100) reached 154.1 in Istanbul, 182.5 in Ankara, and 168.1 in İzmir.
The annual change in real prices continues to be negative The annual real price increase, which reached 65.8% in August 2022, has sharply declined since September 2022. Following a temporary increase due to the major earthquake in February 2023, the annual real price increase began to decrease again from March, and since the beginning of this year, real prices have started to decrease in absolute terms. In October 2024, the annual price change, compared to September 2024, rose by 0.7 points to -17.9, remaining in negative territory. It is noted that the pace of the decline in real prices has been losing momentum since June.
It should be noted that the calculation methods for the rent index prepared by BETAM using data from sahibinden.com and the CPI rent index announced by TURKSTAT differ. The rent index released by BETAM considers the increase in "listed rental prices" of properties "announced for new rent." However, it is not known whether a rental has taken place at the announced prices or at what price it occurred. Therefore, it is not appropriate to make a direct inflation-related rent index calculation. On the other hand, the rent price index monitored by TURKSTAT through the Household Budget Survey reflects the price increase experienced by "tenants who continue to live in the same house."
Increasing trend in current prices There has been a notable slowdown in the annual increase rates of current prices year on year for the past year. The annual change in housing prices peaked at an increase of 198.7% nationwide in August 2022. Although housing prices continued to rise in the following months due to inflation, a clear slowdown in the pace of increase has emerged. The average annual increase rate for current housing prices nationwide reached 21.9% as of September 2024.
The annual increases in current prices for the three major cities showed an upward trend in October 2024, contrary to previous months' trends. After hitting a peak at 240.9% in July 2022, prices in Istanbul began to decline, with the annual price increase dropping to 21% in October 2024. In Ankara and İzmir, prices peaked in September 2022 (205.6% and 183.1%, respectively), and in October 2024, the annual increase rates in these two cities decreased to 24.7% and 26.7%, respectively.
Increase in housing demand After an exceptional rise in January 2023, where the demand index reached 235, it followed a downward trend after the February 2023 earthquake, declining to 88.7 by November 2023. The index reversed direction starting from December 2023, achieving a 4.5% increase from September to October, reaching 165. Compared to October of the previous year, the index was 69.2% higher.
Annual change in real rent is negative The annual change rates for inflation-adjusted (real) rent across Turkey had been declining for a long time. Excluding the exceptional increase from May to June of last year, the average annual change in real rent peaked at 86.6% in February 2023, and then started to decline. By February 2024, the annual changes in real rent prices became negative, approximating -15% in May. The downturn in real rents lost momentum after May, and this slowdown has become more pronounced since August. According to the October data, the annual change in real rent prices rose by 0.7 points to -2.1%.
Increase in the rate of change in current rent prices The annual change in current rent prices across Turkey had been declining since September of last year. Although there was a slight increase in the rate of current price changes observed in August of this year, the decline continued as of September. However, in October, this decrease was replaced by a slight increase. The year-on-year change rate for rent prices nationwide, which was 45.2% in September 2024, rose to 45.4% in October 2024.
Another significant feature of the rental housing market is its susceptibility to seasonal effects. Seasonal effects are clearly observable: demand increases between April and September, decreases in the following months, and tends to remain relatively stable during winter months. The rise in demand for rental housing during the spring and summer months is believed to be influenced by relocations due to job transfers and university students. Therefore, it is crucial to consider seasonal effects when interpreting changes in demand indicators.
While the demand indicator for rental housing fell during the period from August to November last year, it showed a slight upward trend after December, and from May 2024 onward, the housing demand index has shown significant increases. However, in October, the rental housing demand index decreased by 18.9% (from 215.5 to 174.7). The rental housing demand is 0.6% higher compared to October of last year.