Owning a house is a dream: Housing crisis hits Turks ahead of elections

Serhan Ulkudju and his wife struggled to negotiate with the landlord before reaching an agreement to extend the annual lease of their family home in the Bosporus area of Istanbul. The monthly rent for their two-bedroom apartment, where they live with their seven-year-old son, increased by147 percent in a year, from4,650 Turkish lira to11,500 lira (about600 dollars) -25 percent more than the minimum wage in Turkey.

"I recently lost my job, and my wife's salary barely covers the rent," said41-year-old Serhan, who previously worked at an e-commerce company. "We will try to live on the legal severance pay I received until I find a new job. I don't know what we would do if I hadn't received it," he added, noting that new tenants pay around15,000 lira ($770) for apartments similar to their own."

Turkey is experiencing a period of rapid inflation growth.

Turkey is experiencing a period of rapid inflation and economic downturn, which has hit the country hard since last year, ahead of critical presidential and parliamentary elections scheduled for May14th. Although the ongoing cost of living crisis is impacting all aspects of life, the cost of housing in particular has significantly surpassed the already high overall inflation. According to data from the Central Bank of Turkey, property prices across the country saw a year-on-year increase of141.5 percent in Turkish lira in February. Property prices rose by approximately75 percent in US dollars during the same period..

** Colossal growth in real estate prices is happening despite the ongoing decline in real estate sales - in March, the number of sales decreased by21.4 percent compared to the previous year, according to the Turkish Statistical Institute. The cost of real estate rent all over Turkey also increased by157 percent in March compared to the previous year, as reported by the Center for Economic and Social Research (BETAM) at Bahçeşehir University in Istanbul.

Government rushes to try to ease housing crisis ahead of election

The government is rushing to try to ease the housing crisis before the election. In June 2022, rent increases were capped at 25 percent for people who have lived in the same apartment for less than five years. The initiative is in place for a year, until July. However, the Ulcuju family has lived in their apartment for more than five years, which legally gives their landlord the right to set the rent at the current market rate, even if it means increasing the rent by more than 25 percent.

Ahead of the upcoming elections, Erdogan is also trying to attract more working and middle class Turks to the real estate market. Two ambitious construction projects have been announced, specifically for those who do not own real estate, and the president has also promised to build hundreds of thousands of new homes across the country by 2028. On Tuesday, Erdogan told a campaign event in the southern city of Antalya that his government would announce even more housing projects and additional regulations to protect citizens.

The Turks are feeling the pressure

All three Turkish nationals who spoke to Al Jazeera said their purchasing power has decreased significantly since last year as increases in income have not kept pace with rising costs in the country, especially rising housing prices. Bora Cikikcioglu, who has been working for 10 years, said his rent has risen from 4,000 liras in his previous apartment a year ago to 10,000 liras (about $514) in the apartment where he now lives. He added that people who live longer in the same housing often face more lenient rent increases.

"The main problem is finding a place to live without unrealistic rent prices if one has lost the apartment they are in," said Bora, 38. "Renters don't feel safe in this environment," he added. Both Cikikcioglu and Çağan, longtime Istanbul residents, said buying real estate is a "dream" for Turks working for a salary.

"For someone who has been active for more than 20 years, it is impossible for me to live alone in the areas of Istanbul available to me [to commute to work]," said 42-year-old Çağan, who did not want to give his last name. "When I can't afford rent, I need to live alone in Istanbul, how is it possible for me to buy an apartment in the current market conditions?" - he asked.

Çağan, Ulkücücü and Çikikcıoğlu believe that inflation will not stop and rental prices will continue to rise in the short term, regardless of the outcome of the upcoming elections. Turkey's minimum monthly wage was raised to 8,506.80 liras ($437) in January, an increase of about 55 percent from the previous increase in July, and about double the January 2022 increase.

The roots of the housing crisis

Safettin Gürsel, a professor of economics and director of BETAM, told Al Jazeera that the roots of the housing problems in Turkey today lie in the 2018 crisis, which led to a massive drop in prices at a time when there was a huge amount of unsold housing in the country. "At that time, new housing projects were significantly reduced [due to the crisis]. The construction industry lost a third of its jobs in two years. As a result, the supply of housing for sale ultimately decreased," he said.

The Erdogan government has deviated from the international approach to combating high inflation. Instead of raising interest rates, as central banks in much of the world have done over the past few years to reduce inflation by encouraging savings rather than spending, he has lowered rates. The Turkish president, however, has repeatedly stated that he believes inflation itself is actually caused by high interest rates and has called himself an "enemy of interest rates." Last month, he reiterated that interest rates will continue to decrease as long as he is in power, and that inflation will decline in parallel with them. The central bank has cut its key rate from 19 percent to 8.5 percent since the end of 2021, ignoring the soaring inflation.

Experts say that this has led people to invest in real estate, as accumulating Turkish lira is likely to result in devaluation due to the ongoing depreciation of the currency and inflation. At the same time, the more people invest in real estate, the more housing prices rise. "The Turkish Central Bank has been lowering interest rates... as inflation sharply increases. To protect savings in Turkish lira from inflation, the demand for housing has grown," said Gürsel, adding that a significant reduction in mortgage rates in 2020 also increased demand for real estate.

Counteraction to foreign buyers

Foreign buyers, who have flooded the Turkish real estate market in recent years, are also a factor in rising prices. They were attracted to Turkey by the fall of the lira, as well as the relatively easy and quick access to Turkish citizenship through property purchase. According to Seyfettin Gürsel, the increase in housing sales to foreigners has led to a "huge rise in prices," especially in tourist regions such as the southern provinces of Antalya and Mersin. In the latest BETAM report on housing prices in March, the annual growth rate was 137.5 percent in Antalya and 139 percent in Mersin.