Turkey to address soaring rents as house price index leaps 110%

Turkey’s residential property price index (RPPI) continued to move northwards and surged an annual 110% in March in nominal terms, official data showed.

The climb came ahead of a key meeting between the government officials, who are said to discuss soaring rents in the country.

The surge comes against a background of rising inflation, which runs at a 20-year high of nearly 70% as of April, propelled by rising energy and commodity prices.

Measuring the quality-adjusted price changes of homes, the index leaped an annual 96.4% in February. The increase had stood at 77.5% in January and 59.7% in December. Almost a year ago, the index’s annual rise was 32%.

The March RPPI was up 29.7% in real terms on the year and rose 13.5% from a month earlier, the Central Bank of the Republic of Turkey (CBRT) said Monday.

Soaring prices and rents have triggered alarm, and the government has pledged to act. President Recep Tayyip Erdoğan earlier this month announced several measures to address the soaring real estate prices, as residents struggle to find affordable homes to rent or buy.

Officials from the Environment, Urbanism and Climate Change Ministry, the Justice Ministry and the Treasury and Finance Ministry are due to meet later Tuesday to discuss potential arrangements to address soaring rents.

In the country’s largest city Istanbul, home to around a fifth of Turkey’s population of 85 million, the index climbed 122% on the year. Month-over-month, it rose 9.8%, the data showed.

The gauge was up 111.7% and 105.9% on annual basis in the capital Ankara and the Aegean province of Izmir. On monthly basis, it surged 9.6% and 10.6% in the two cities, respectively.

According to the Turkish Statistical Institute (TurkStat), average rents – which began soaring nationwide in December after a sharp drop in the Turkish lira – rose 19.7% year-over-year in March.

The construction index has soared 102% year-over-year in March, according to data from TurkStat.

Despite high borrowing costs and soaring prices, residential property sales in Turkey rose nearly 40% year-over-year in April, according to the statistical body, as households continue to view real estate as an attractive investment tool to shield themselves from inflation.

House sales rose 38.8% in April to 133,058 units, up from 95,863 a year ago, marking an all-time monthly high for the month. It followed the highest March figure to date, as sales hit 134,170, a 20.6% year-over-year increase.

Sales from January through April were up 26.2% to 453,121 houses.

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