Where real estate prices in Turkey have witnessed a significant increase in recent years, especially in the post-global closures and the Corona crisis, these increases were actually caused by the delay in construction and reconstruction, which led to a rise in demand and a decrease in supply.
What is a real estate bubble?
It is an economic event. It is a temporary economic boom, but it is large and illogical in real estate prices. It occurs in the global real estate markets, in which real estate prices are increasing dramatically. It is a temporary event and does not last for a long time.
Signs of an imminent or near real estate bubble:
The increase in real estate prices, which makes home ownership out of the reach of more buyers. And the occurrence of cases of price inflation in an unacceptable and unrealistic way.
This is paralleled by a state of collective reluctance to purchase for quite some time. It may be noticeable that major investors in this sector exited with their profits, which they obtained before the bursting of this bubble or at its beginnings.
Signs of a real estate bubble - Prices rising at a rapid pace well above the rate of inflation - Limited real estate supply relative to the number of buyers
Reasons for a real estate bubble:
• Economic prosperity and increased demand for ownership: The rise in general economic activity in the country and the increase in prosperity among the population encourage the ownership of homes and real estate in order to preserve them, thus crowding out those in need.
• Entry of a demographic segment to the housing market in a way that exceeds the capacity of the real estate market to absorb it.
• Loose lending criteria that facilitate obtaining a real estate loan, making home ownership affordable in terms of the possibility of paying its price.
• Innovative features for marketing and selling real estate products, such as properties with low down payment and monthly payments, that make home ownership easier.
• Speculative behavior by market makers of investors and large developers of real estate, which is fueled by unrealistic and unsustainable estimates of estimating and charging housing prices.
• Global and local inflation: As the real estate consists of land and building materials, and the increase in the price of either of them naturally leads to a rise in the price of the property. The price increases for new properties are greater than for old ones; Due to its high cost, which leads to higher market prices in general.
• Announcing plans for major projects in some areas, which results in increases in real estate prices due to the demand for that area.
• The low cost of real estate financing and the leniency of banks in granting financing to those who are unable to pay in the future... which leads to real estate being withdrawn from them and displaying it in the market, thus increasing the supply and decreasing the price.
• The addition to the decrease in the areas allocated for the construction of buildings.
• As well as lower mortgage interest rates.
Disadvantages of a real estate bubble:
When the real estate bubble bursts, speculation spreads and many economic damages occur, which leads to the collapse of real estate prices, in addition to the borrowers' failure to pay them. They naturally exceed the market value of their property.
This results in a number of negative consequences, the most important of which are: bankruptcy, low chances of obtaining adequate housing, and a decline in economic activity in the country.
In fact, it is difficult to predict the exact results of the bursting of the real estate bubble, and it is even difficult to be sure that it is a real real estate bubble until it bursts, and its effects appear on the ground in many cases.
The economy as a whole is affected. The occurrence of a real estate bubble does not affect the real estate market only, but affects the entire economy, and thus may force people to turn to loans and unexamined credit, and after the bubble bursts, many people lose their homes and their savings.
How do I avoid buying and investing in a real estate bubble?
You must prepare for the right time to buy a property, and take into account the safety factors necessary to obtain a deal that is far from risks, such as buying a property in installments and with payments that you can afford and do not constitute a burden on you, while balancing the negatives and positives, and calculating each of the risks and opportunities to make a right decision. With readiness for any emergency event.
Istiklal Homes real estate tips for those wishing to enter the Turkish real estate market:
• It is necessary to choose a reliable project and a good real estate developer, and make sure of the company's precedent in the implementation and delivery of projects, and make sure of licenses and building permits, to avoid any problem that may occur at the time of delivery or in the implementation of the project, while some prefer to wait until the vision becomes clear and prices stabilize.
• The real estate market often remains the safe haven for investors' investments, and that is why today we have hundreds; Rather, thousands of successful investment experiences conducted by Istiklal Real Estate clients on the ground.
• It is true that talking about real estate bubbles irritates investors who are afraid of a loss in their savings, but we can say: that what is happening today in Turkey in terms of price increases is suspicious, but rather that increases in real estate prices have so far reinforced the idea of real estate investment success in Turkey is a country that is moving steadily towards development and prosperity.
• We also advise you when you want to buy a property with more caution and caution, and not to miss the advice of the real estate experts at Istiklal Homes Real Estate Company; Our human energies and the expertise of our high work teams will allow you to know many of the mysteries and information that you should not lose sight of when making the crucial and important acquisition decision.