Turkey has faced a situation with the lowest property prices in its entire history.

The Turkish Central Bank published its annual report on the housing index in Turkey last week, revealing that the country is facing one of the worst housing crises in its history. The bank reported that the average cost of real estate in Istanbul reached1.6 million Turkish lira ($110,000) in2022, compared to750,000 Turkish lira last year (see chart below). According to the bank's data, housing prices in February rose on average by96.4 percent across Turkey compared to the previous year, with Istanbul experiencing a106.3 percent increase. Even in Kurdish cities such as Diyarbakir and Sanliurfa, located in the southeast and considered the least developed regions of the country, the increase was111 percent.

"Turkey: Rental and housing prices are skyrocketing due to a lack of supply. Read more »""

Inflation and growth in construction costs

Experts say that inflation, rising construction costs, and the imbalance between supply and demand play a significant role in the crisis related to the surge in real estate prices. Middle East Eye reported in September 2021 that the cost of a ton of cement was 500 lira ($60). Currently, the cost of a ton of cement is around 1,400 lira ($95). "Not just cement, but all the materials you use in construction are becoming increasingly expensive every day," said contractor Ibrahim Gozcu. "Last year, a cubic meter of concrete cost about 160 lira, or $20, at the then exchange rate. Now it costs no less than 460 lira, or $32." Inflation was around 19 percent in September last year, and then soared to 61.4 percent in March after the US dollar appreciated by more than 50 percent over the year. The Russian invasion of Ukraine has also impacted the construction sector, as prices for goods continue to rise. "For example, a ton of construction rebar cost about 6,100 lira ($745) last April. Now it costs 15,000 lira ($1,022)," Gozcu said.

Dramatic rise in prices

The middle class, which is looking for housing, has suffered the most from the sharp rise in prices. Economist Ugur Gurses published a chart on Twitter showing the growing gap between the consumer price index (CPI), which includes the cost of food, energy, and transportation, and real estate prices. His chart indicates that real estate prices have increased twice as much as wages in line with inflation. The head of Kiptas, a construction company subsidized by the Istanbul municipality to provide cheaper housing for low-income and middle-class families, stated: "It is becoming impossible for people to buy an apartment, as one square meter of apartment costs about 14,000 lira ($955) in Istanbul. In other words, an average 100-square-meter apartment costs 1.4 million lira ($95,000)."

Problems with the rental

Considering that the monthly minimum wage in Turkey is 4,253 lira ($290), a low-income worker would need to work for over 27 years to afford an average apartment—assuming they spend none of their income on anything else and inflation does not worsen. Ebubekir Keser, a private employee, told MEE that it is nearly impossible for him to buy an apartment in Istanbul. "For the past three months, I have been looking for a suitable apartment to buy. Even during this time, prices have increased by 30 percent," said Keser. Rental housing has also become more expensive.

Anger towards foreigners

The crisis in the real estate sector has also triggered another crisis, as thousands of Turks on social media are calling on the government to repatriate refugees, stop the arrival of new ones, and ban the sale of real estate to foreigners. Currently, Turkey grants citizenship to any foreigner who purchases property worth $400,000. Over the past nine years, 293,000 properties worth $41.3 billion have been sold to foreigners. The growing animosity towards refugees has prompted the government to signal a change in its policy. On Monday, Turkish President Recep Tayyip Erdoğan stated that his government is working on ways to ensure a "safe and dignified return" for refugees. "Turkey is hosting five million displaced persons, of which 3.5 million are Syrians," Erdoğan said. "Although we have been left alone, we are doing everything possible to ensure the safe and dignified return of our Syrian brothers." Süleyman Soylu, the Minister of Interior, accused opposition parties of "provocation" regarding the refugee issue, but also stated that Turkey will prohibit Syrians from visiting their homeland during the upcoming Eid holiday. Every year, several hundred thousand Syrians visit their homeland for Eid and then return to Turkey. These trips have faced criticism from the opposition, which argues that they prove Syria is now a safe country for return. Opposition parties, including the Republican People's Party, have long promised to send Syrians back to Syria. "I left Istanbul because Arabic predominated in my neighborhood. I came to Antalya, and here I hear more Russian than Turkish," said tailor Ahmet Erdem, who left the Fatih district of Istanbul two years ago. "Imagine if there were no millions of foreigners in this country. Property prices would drop, as they also rent and buy homes. This is not about racism or anything else. But we [in Turkey] no longer have money. If we cannot help ourselves, how can we be expected to accept and care for others?"