Istanbul's housing crisis likely to deepen despite expected construction boom

Türkiye's Housing Developers and Investors Association (KONUTDER) anticipates a rise in new housing projects over the next six months; however, it adds that this increase is unlikely to alleviate the housing crisis, according to its latest Housing Sector Expectation Survey.

The survey, conducted in collaboration with NielsenIQ Türkiye and covering the first half of 2025, reveals that 81% of KONUTDER member companies plan to launch new projects within the next six months. Additionally, 71.4% expect an increase in first-hand sales.

Despite expectations of lower interest rates, concerns over Istanbul's housing crisis are mounting. The percentage of respondents identifying an escalating housing crisis in the city has risen from 22.8% to 33.3%. Nationally, 43% of members acknowledged a general housing crisis.

Apartments at night

Housing prices and costs expected to rise

Key findings in the KONUTDER's survey are as follows:

• Expectations of rising housing prices persist into the first half of 2025, as a majority of respondents (76.2%) predict an increase, while 23.8% expect prices to remain unchanged.
• 66.7% of members foresee a rise in construction costs, whereas 17.4% believe costs will stay the same. Meanwhile, the number of respondents anticipating an increase in labor costs declined by three points to 71.4%.
• Regarding material costs, 61.9% of participants expect an increase, while 38.1% foresee stability.
• The survey indicates that the demand for newly built homes among foreign buyers will remain unchanged, with 71.4% of respondents expecting no significant shift. However, 28.6% anticipate a decline.
• Regarding overall housing production, 47.7% of participants expect stability, 33.3% predict an increase, and 19% foresee a decline. In the field of urban transformation, 67% expect an increase in housing production, while 28.5% predict no change, and only 4.8% anticipate a decrease.

High-rise residential buildings under construction

• Despite expectations of lower interest rates, respondents do not foresee a significant shift in mortgage borrowing trends. While 47.6% believe mortgage use will increase, 52.4% expect it to remain unchanged.
• 52.4% of KONUTDER members predict rental prices will stay the same over the next six months.

'Favorable mortgage conditions would benefit everyone'

Commenting on the survey results, KONUTDER Chairman Ramadan Kumova emphasized that the positive developments in housing sales since the second half of 2024 have bolstered expectations for improvements in production, sales, and mortgage rates.

“Our survey results confirm these expectations,” Kumova said. “90% of our members anticipate a drop in mortgage rates, which, in turn, sustains production and sales optimism. Over the past five years, housing production has lagged behind demand, leading to a supply shortage and higher rental inflation.

"We clearly see growing concerns, especially in Istanbul, regarding housing availability. Our recent surveys show that one in three respondents highlights the housing crisis as a key issue. People want to buy homes, and developers are ready to build. Ensuring favorable mortgage conditions would benefit everyone.”

March 08, 2025 04:13 PM GMT+03:00