Rentals climbing sky-high in Istanbul

Sky-high Istanbul property prices are causing problems for first-home buyers and renters.

High construction prices and slowed building due to Covid-19 is making it difficult to find a house to rent or buy.

Property Turkey director Cameron Deggin has noticed a shift over the last few months. 

"For six months or so, prices have climbed significantly," Deggin said. "Properties are selling over the asking price, but investors are making their money back through rents, which have climbed between 50 and 70% in the last six months."

Deggin points to a new property, an apartment in Besiktas. "Last year, it sat on the market for several months at US$150,000. It didn't sell - buyers thought it was too highly priced, and they were probably right.

"This year, different story. Not only did that property sell for $250,000, there was a bidding war."

While interest in central city areas have remained strong -- upmarket Beyoglu -- outer regions like Buyukcekmece and Bahcesehir are also experiencing strong demand in rent and sales.

"Prices are rising everywhere," Deggin said. "And until construction catches up, that trend will continue."

Before the pandemic hit, urban transformation was marching across the 16 million population megacity. The rapidly changing development, especially on Istanbul's Asian side, transformed the city suburbs, and created thousands of new residences. 

"Everything has slowed right down," Deggin explained. "And what's more, with the lira losing value against the dollar, construction costs, which are dictated by the cost of imports, have become pricier."

Before the pandemic, Turkish first home buyers -- mostly made up of young professionals trying to get on the property ladder -- made up the lion's share of the industry. Today's high lending rate has put the brakes on these aspirational buyers, and forced them to stay in or seek out rentals, adding to the overinflated rental market. 

While some blame the influx of refugees for the high rental prices, Deggin says this is only true in a few neighbourhoods. "While refugees make up a significant proportion of the city, they tend to congregate in certain districts, such as Fatih."

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