- September 4, 2012 at 8:30 am #57043
Is the Turkish property market heading for a collapse like that of Spain and for similar reasons? There has been a housing boom in Turkey for a number of years now and house prices there are still rising albeit at a slow rate. Although Turkey didn’t embark on the same manic house building boom as Spain you can see evidence of the large number of properties that have built in Turkey when you take a look at the hills around Bodrum that are covered all the way up the hillside with sugar-cubed white-washed houses that have been built in recent years. You couldn’t go round the town of Bodrum without seeing an English property speculator crawling out of a rock. Many British expats bought homes in Turkey because they couldn’t afford the high prices for property in their preferred places like Spain or Greece. Some bought property in Turkey as a purely speculative investment in the hope that Turkey will some day join the Eurozone which will cause property prices to go through the roof. However, Turkey has for a long time been requesting to join the Eurozone but to no avail and as yet there is no agreement from the European countries to allow Turkey to join the Eurozone, particularly given all the turmoil in Europe and the threatened breakup of the Eurozone.
More and more houses are being built all the time on the coastal regions of Turkey to cater for the second home market and there is a very real danger that Turkey is building so many houses that it will be in danger of going the same way as Spain in producing a vast over-supply of property that will cause house prices to crash.
Some people say that Turkey is doing well economically because it is outside of the Eurozone and some think that Turkey should be included in the list of BRIC countries (Brazil, Russian, India, China) that are growing rapidly. However, if people go on believing the hype then this will lead to even more properties being built and further rises in property prices that will inevitably result in a Spanish style property collapse.
The demand for second homes in Turkey will be severely reduced as property prices become cheaper in neighbouring Greece causing more people to want to buy property in Greece than buy in Turkey. Many people bought property in Turkey because they found themselves priced out of the property market in Greece because of the high house prices during the boom years but now that property prices in Greece are falling fewer people will want to buy property in Turkey which will result in a sharp drop in property prices in Turkey. Turkey is still building many houses despite the global economic downturn and it is inevitable that the property market in Turkey will crash in much the same way as in Spain for the similar reasons of over-supply and collapse in demand.
There is a very good reason why high house prices in Turkey are unsustainable in the long term. This is because Turkey is a huge country which means that there is plenty of land to build houses on. Turkey’s coastline along the Mediterranean is vast and stretches for hundreds of miles. High house prices will only result in more houses being built and the more you produce of something the less is its individual worth.
I used to think that property prices in Turkey would fall by 50% from peak to trough in three to four years time but given that property prices will have collapsed in both Greece and Spain by then when these countries finally exit the Euro and that the British economy and property market Ponzi scheme will have also collapsed then demand for property in Turkey will also collapse causing a further reduction in house prices and so my prediction is that house prices in Turkey will fall by 75% fall from peak to trough in three to four years time when Greece and Spain have both left the Euro and the British economy has collapsed.
If house prices keep rising steeply and more and more property is built over the next few years then this will make sure that Turkey will experience a massive property crash guaranteeing that the peak to trough falls in house prices will be around 75%.
This means that a three bedroom house bought in Turkey for around £40,000 in recent years will end up being worth just £10,000 in three to four years time when the Turkish property market has crashed. The expats who bought property in Turkey in recent years in the hope of making a killing will end up sorely disappointed as they are likely to get their fingers just as badly burnt as happened in Spain.
As in Hans Christian Andersen fairytale “The Emperor’s new clothes” where a boy says what is obvious to everybody that the Emperor is naked, it will take someone to wake up and say that what is happening in the Turkish property market is ridiculous and say it the way it is that is obvious to everyone but people were too afraid to say for fear of looking foolish. The Turkish property market will eventually become like Spain in that properties are way over-priced and a massive glut of new homes have been produced all of which will send the Turkish property market over the edge of a cliff and into the abyss.
- September 4, 2012 at 7:32 pm #112003
Wrong forum Jake, you need to find the Turkish property forums for this question and spread your joyous postings on that 🙂
In case you didn’t notice this is a Spanish property forum.
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