Ankara and İstanbul, Turkey’s two largest cities, have witnessed the world’s fastest house price growth in the past year, according to the Global Residential Cities Index.
The Global Residential Cities Index tracks mainstream residential prices on a city-by-city basis. Updated quarterly, the index tracks the performance of house prices across 150 cities worldwide.
According to the index’s recent report on the third quarter of 2023, as of September 2023, compared to the same month in 2022, Ankara experienced an astonishing 102.7 percent increase in house prices, while İstanbul saw a substantial surge of 77.6 percent.
These remarkable price surges come in the midst of Turkey’s rapid inflation, which stood at 61.98 percent in November, driving many Turks to seek real estate investments as a means to safeguard their wealth. The soaring interest rates in the country, currently at 42.5 percent, have forced many buyers to opt for cash purchases.
Notably, İstanbul has also attracted the interest of foreign investors, particularly Russians, drawn by the city’s real estate market. In contrast to this trend, London ranked 78th out of 107 cities, as house prices fell by -1.2 percent in the UK capital.
According to the index the housing market landscape globally continues to show healthy price growth, despite record interest rate increases since late 2021. The report highlights the factors contributing to these price increases, including low housing stock availability, above-inflation wage growth, elevated household savings and limited new construction.
Turkish cities Ankara and İstanbul maintain their positions at the top of the rankings, while Dubai has the third spot in the index. In contrast, European cities such as Stockholm, Bratislava and Frankfurt have seen declining prices annually in double-digit percentage points.
While the recent quarters have seen rising prices, the report notes that challenges to a sustained housing market recovery persist, including higher mortgage servicing costs. Although mortgage rates are expected to decrease in 2024, the cost of debt will remain notably higher than pre-pandemic levels, adding to affordability pressures for homebuyers transitioning from previously lower-rate deals.