Early election prompts urgency in Turkish property market
President Recep Tayyip Erdogan has called an early election for June 24, 18 months ahead of schedule. With the decision to take Turks to the polls for the sixth time in four years, the Turkish leader has sent shockwaves through the country, and a sense of immediacy for would-be investors of Turkish and Istanbul investment property.
Why has Erdogan called an early election?
Turkey’s economy experienced an impressive 7.4 percent growth last year thanks to a credit boom and a raft of measures designed to stimulate the economy. On the other hand, inflation has remained a problem for the government, with a double-digit figure for more than a year, and the Turkish lira continues to fall, having lost more than half its value against the dollar over the past five years.
At the moment, the economy is cruising along on its 2017 momentum. But it’s expected to slow, and Erdogan wants to be firmly at the helm before it does. Delaying the election might mean competing not only with opposition parties, who will have had more time to marshall a campaign, but a slowing economy, lessens the leader’s chances of re-election.
June’s elections will mark the first time Turks have gone to the pools to vote for president and parliament on the same day, part of the constitutional amendments the country okayed when Erdogan won his presidential referendum in 2017.
Our election predictions
Property Turkey director Cameron Deggin says the Turkish economy generally sets a bellwether for its political trends and current indications point towards Erdogan’s success. “When news of the election hit the markets, we saw a sharp currency rebound against the US dollar, showing that investors expect Erdogan to win in June,” he says.
Deggin says he’s been fielding calls from potential property investors since the announcement. “The low lira has been a positive as far as investors with foreign currency are concerned. With the election announcements, property investors have realised that the favourable currency imbalance won’t last forever.”
“A three-bedroom Istanbul apartment priced at $292,000 last week is now $300,000. This is how quickly the market has moved following the announcement, and that is just the beginning.”
Deggin believes another few years of Erdogan will mean stability for the economy. “As economists are pointing out, it’s unlikely Turkey can sustain seven percent growth for the next couple of years. However, Erdogan’s track record of economic reforms resulting in growth even during times of crisis, like we saw during the 2008 credit crunch, means we can at least be sure of an overall positive trend.”
Deggin says investors should take action “sooner rather than later.”
“As well as boosting the lira, the positive market brought on by the election result will inflate real estate prices. Give it a few months and we’ll see this dynamic played out. Investors need to move ahead of the impact to take advantage of the low lira and current stable prices.”