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What you don’t know about real estate bubble and real estate investment in Turkey

Posted by Dari TR on 19 December، 2022

It is natural that property prices change globally between high and low, but sometimes their prices rise abruptly and reach unreasonable numbers, and then fall suddenly. This is the result of the so-called real estate bubble.

If you are interested in real estate investment in Turkey, you need to know what a real estate bubble is. What are the reasons for them, and how likely is a real estate bubble in Turkey’s real estate market.

real estate bubble and real estate investment in Turkey
What you don’t know about real estate bubble and real estate investment in Turkey

What is a real estate bubble and why is it dangerous?

A real estate bubble means a significant and irrational rise in property prices, but it quickly falls gradually or abruptly.

The real estate bubble begins with an increase in real estate demand that is inversely commensurate with the number of properties offered, and this significantly increases the prices of available properties.

This is followed by speculators entering the market, buying many homes to sell later. Real estate prices rise for unreasonable numbers.

Then the demand for real estate falls and the market stagnates. This leads to a sharp drop in prices, and then the real estate bubble explodes.

The real estate bubble could bankrupt investors and homeowners in the region where it is formed, and its effects could damage the State’s economy.

Causes of the real estate bubble

The real estate bubble is not a vacuum, but there are previous reasons for it that can be used as indicators to predict the occurrence of a real estate bubble, such as:

The high demand for property purchases for several reasons, such as the improvement of general economic conditions. This increase in demand naturally drives up the supply price.

Speculators’ heavy entry into the real estate market, and buying the largest number of them for subsequent sale. This increase in demand raises property prices and gradually forms a real estate bubble.

Facilities in mortgages and grants to those unable to repay them. This leads to the withdrawal of properties from them and their offer in the market, increasing the supply and decreasing the price.

Is real estate investment in Turkey experiencing a real estate bubble?

Turkey’s real estate market has grown rapidly in recent years. But some ask: Is real estate investment in Turkey safe or are we on the cusp of a real estate bubble?

There are a range of reasons why real estate investment in Turkey is guaranteed and far from economic bubbles, especially in Istanbul properties. For the following reasons:

1. Growing demand for real estate

Turkey’s real estate, especially Istanbul’s, is very popular, because Istanbul’s population growth is constantly rising, and over the past years it has grown by 4%.

But Istanbul’s rising population stems not only from natural population growth, but also because Turkey’s largest cities attract many foreigners.

Foreigners want to buy Istanbul properties for various reasons, such as residing in them while working or studying, and acquiring Turkish citizenship through real estate investment.

It should be noted that the proportion of foreigners who purchased property in Turkey in 2021 is reasonable (4%), and cannot cause a real estate bubble in any Turkish city.

Have you seen the latest amendments to the Turkish Citizenship by Investment Law? You’ll find it in this article.

Learn about the most important amendments to the Turkish citizenship law through investment

2. Expanding investment opportunities in Istanbul real estate

The number of land available for development in Istanbul was rather limited, as it is located on two narrow peninsula surrounded by water on three sides, and there is little room for the city to expand.

But after the announcement of the Istanbul Canal project, many opportunities were opened for those wishing to invest in real estate in Turkey, and many projects have already begun in the surrounding land.

These new projects will increase the number of Istanbul properties, and significantly reduce the likelihood of a real estate bubble.

3. Growth of Turkey’s economy

Turkey’s economy has grown by about 7% over the past years, which has helped increase the demand for real estate and real estate investment in Turkey.

Turkey’s economy is expected to continue to grow in the future. This will help to create new jobs and sources of income, and a reasonable increase in the number of people looking to buy homes.

The decision to buy a property is not an easy one. You need to consult specialists before embarking on it. Our experts at Dari Properties are ready to receive your inquiries about real estate investment in Turkey at all times. Get in touch today!

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