Türkiye to buoy housing supply to tackle rent hikes

will be increasing supply and facilitating access to affordable housing as part of measures to tackle the rising prices of rents and improve accessibility, Treasury and Finance Minister Mehmet Şimşek said yesterday.

Şimşek said new social projects would be developed to compensate for losses in stocks, mainly related to the earthquakes that struck the southeastern region a year ago, and to enhance access to housing for low-income citizens.

Housing has been a significant issue in Türkiye, with demand often outstripping supply, leading to inflated rental prices, particularly in urban centers.

Residents have struggled to find affordable homes due to soaring prices, attributed to stubbornly high consumer inflation, which climbed to nearly 65% in January and is expected to peak in May or June before dipping as of the second half of the year.

The authorities have capped annual rent increases at 25% since 2022. The measure, though, led to a major surge in legal conflicts between landlords and tenants.

Many owners have tried to push out occupants, sometimes fraudulently, to set new and higher rents.

Before the regulation, once-a-year price hikes for existing tenants were capped at the average annual inflation rate over the past 12 months.

Rent, along with petrol vehicles and tobacco has the heaviest weighting in the official inflation basket.

Şimşek highlighted that the “real rent” index, which stood at 475.07 in November 2018, had surged to over 1,888 by November 2023.

The minister reported an increase of 297.42% during the period from 2018 to 2023.

Şimşek further detailed that the monthly rent increase rate, which stood at 9.52% in September 2023, had eased to 7.91% in October, 5.97% in November, and 4.48% in December.

“In the medium term, to combat inflation and mitigate the increase in rental prices, the housing supply will be increased,” the minister said, responding to a written parliamentary question from the opposition Republican People’s Party (CHP).

“Additionally, new social housing projects will be developed to compensate for losses in earthquake-related housing stocks, and efforts will be made to enhance access to housing for low-income citizens,” Şimşek said.

In a policy shift after last year’s elections, the country’s central bank delivered aggressive rate hikes that took its benchmark policy rate to 45% from 8.5% in June in a bid to get inflation under control.

The bank signaled last month that the tightening cycle was complete.

The higher policy rate has led to much higher costs for mortgages, auto loans, business borrowing and many other forms of credit. Higher mortgage rates have sharply reduced home sales.