Foreign investors turned to the second-hand housing market

Demand in the construction and thus real estate sector, which is one of the most important factors of growth in Turkey, has been progressing below expectations in recent years.

According to the November 2022 data of the Turkish Statistical Institute, the number of houses sold has been decreasing for the last five months compared to the same period of the previous year. Housing sales across the country decreased by 34.1 percent in November compared to the same month of the previous year. Housing sales to foreigners increased by 20.4 percent compared to the January-November period of the previous year. In November, the share of house sales to foreigners in total house sales was 5.2 percent. Antalya took the first place in house sales to foreigners with the sale of 2 thousand 616 houses. Antalya was followed by Istanbul with 733 house sales and Mersin with 567 house sales, respectively. In particular, there was a decrease in the demand for first-hand housing, which directly contributes to the economy and encourages construction companies to develop new housing projects. The number of first-hand house sales in Turkey decreased by 32.9 percent in November compared to the same month of the previous year and became 37 thousand 380. The share of first hand house sales in total house sales was 31.7 percent. On the other hand, according to TUIK data, first-hand housing sales in the province of Istanbul, where the most housing is produced in our country, decreased to 13 percent in November. This situation showed that especially foreign investors prefer second-hand housing instead of buying new housing from the projects. It was observed that the second-hand housing market was active in the provinces of Antalya and Mersin, which are in high demand by foreigners outside of Istanbul. The increased interest in the second-hand housing market by foreigners created additional pressure on the rising housing prices in the inflationary environment in our country. It has made the housing prices in the second-hand markets compete with the new housing projects. While new house prices increased in parallel with the increase in construction costs, second-hand house prices started to rise with foreign demand. While the direct contribution of the foreign currency brought by foreign investors in the purchase of second-hand housing to the economy is less, the decreasing interest in construction companies trying to develop new housing projects started to affect the sector negatively. While the place of the real estate sector in foreign direct investments in our country is increasing day by day, the shift of demand to the second-hand market has changed the balance. On the other hand, it has been observed that the demand for housing has increased in order to obtain a temporary residence permit for Russian citizens, who have shown high demand in recent months. In order for foreigners to obtain a residence permit in Turkey as a real estate owner, the condition that the value of the said real estate should be at least 75 thousand USD in metropolitan cities such as Istanbul and 50 thousand USD in small cities such as Yalova, especially for Russian citizens who temporarily left their country due to the Russian-Ukrainian war. to the housing market. After the lower limit of Turkish citizenship was increased to 400 thousand USD in June, it was observed that the demand for low-budget second-hand housing increased only in order to obtain a residence permit. This situation caused the housing prices to rise excessively by the sellers who wanted to turn the "foreign customer demand" formed in the second hand markets into an opportunity. The requirement that the real estate value in question must be at least 75 thousand USD in metropolitan cities such as Istanbul and 50 thousand USD in small cities such as Yalova, in order to obtain a residence permit in Turkey, directed the Russian citizens, who temporarily moved away from their country due to the Russia-Ukraine war, to the second-hand housing market. After the lower limit of Turkish citizenship was increased to 400 thousand USD in June, it was observed that the demand for low-budget second-hand housing increased only in order to obtain a residence permit. This situation caused the housing prices to rise excessively by the sellers who wanted to turn the "foreign customer demand" formed in the second hand markets into an opportunity. The requirement that the real estate value in question must be at least 75 thousand USD in metropolitan cities such as Istanbul and 50 thousand USD in small cities such as Yalova, in order to obtain a residence permit in Turkey, directed the Russian citizens, who temporarily moved away from their country due to the Russia-Ukraine war, to the second-hand housing market. After the lower limit of Turkish citizenship was increased to 400 thousand USD in June, it was observed that the demand for low-budget second-hand housing increased only in order to obtain a residence permit. This situation caused the housing prices to rise excessively by the sellers who wanted to turn the "foreign customer demand" formed in the second hand markets into an opportunity. In small cities such as Yalova, the requirement of 50 thousand USD has led to the second-hand housing market of Russian citizens, who temporarily moved away from their country, especially due to the Russia-Ukraine war. After the lower limit of Turkish citizenship was increased to 400 thousand USD in June, it was observed that the demand for low-budget second-hand housing increased only in order to obtain a residence permit. This situation caused the housing prices to rise excessively by the sellers who wanted to turn the "foreign customer demand" formed in the second hand markets into an opportunity. In small cities such as Yalova, the requirement of 50 thousand USD has led to the second-hand housing market of Russian citizens, who temporarily moved away from their country, especially due to the Russia-Ukraine war. After the lower limit of Turkish citizenship was increased to 400 thousand USD in June, it was observed that the demand for low-budget second-hand housing increased only in order to obtain a residence permit. This situation caused the housing prices to rise excessively by the sellers who wanted to turn the "foreign customer demand" formed in the second hand markets into an opportunity.