2023 Housing Market Forecasts. The most curious question for real estate investors and anyone who wants to own a house today is will housing and house prices fall in 2023. or will house prices increase in 2023? Most experts in the housing sector predict less buyer demand, lower prices, and higher borrowing rates. Price increases, along with a shortage of availability, have pushed many buyers aside. In light of this data, the expectation is that house prices may fall slightly, but not as drastically as they did in 2008. Most experts think that when there is an expectation of a decrease in real estate and housing prices in Turkey, even the slower increase in square meter prices in 2022, which has increased almost 3 times 2022, can be considered as a price decrease. It has become an almost impossible expectation to see a price reduction over the existing labels of the real house sales prices. Likewise, even for the officially announced figures, it is not possible to see a decreasing figure in any product on housing sales prices, not in a country where there is 80% annual inflation. The expectation here is that in 2023, even the increase in housing sales prices at the rate of inflation felt will be reflected in daily life as a price decrease. Still, another real estate expert believes the housing market will continue to outperform before the pandemic.
What Can Affect 2023 House Prices?
Obviously, there is no clarity on the Turkish real estate and housing market prediction for 2023. On the other hand, analysts look at data from past years and predict that housing prices will increase slightly in most of the housing markets next year. The decisive factor here will be inflation. If inflation continues and Turkey continues its self-titled rate reduction policy, high inflation may inevitably be at even higher rates.
The First Item That Will Affect Housing Prices; Inflation and Interest
The Turkish government has preferred to fight the economic problems experienced worldwide after the pandemic with a method that many countries’ economic managers and experts do not accept and implement. While inflation is often seen as the biggest problem in a country for the economist, the Turkish government is implementing a policy that believes that the economic recession is the primary problem and that it is more important to keep inflation under control and that it is more important to keep the wheels of the economy turning.
Although it is said that the low-interest loans announced to be provided by state banks will provide fresh money to the market, there is an opinion that this situation will not be reflected in the housing market because middle and low-income people do not have the opportunity to withdraw and repay these loans. In addition, private banks apply a different loan interest rate.
Will Toki Housing Project Lower Real Estate Prices?
The event that is expected and hoped to affect the housing market of Turkey in 2023 is the five hundred thousand housing and land project to be distributed to the narrow and middle-income segments. Since the construction sector in Turkey has come to a standstill along with inflation and economic problems in the world has further increased the increase rates of housing prices, especially in the third quarter of 2022, it can be expected that the Toki project will balance the rate of increase according to inflation, even if it does not reduce the current housing prices. As a result, with the Toki project, there will be a forced revival in the construction sector.
On the other hand, since five hundred thousand people in need of housing will be connected to this project in some way, it is thought that a large part of the current demand will decrease. There is a view that this will have a major impact on reducing the prices of houses already on sale in 2023. On the other hand, there is also the view that this narrow and middle-income segment does not have the potential to offer customers to the existing houses. After all, we are talking about a segment that cannot find enough financing and does not have the potential to buy a house. The number of experts who think that this segment has no effect even on real estate price increases in the second half of 2022 is not small. If the Toki project is completed and their homes are delivered within two years as promised, the impact on housing prices could be significant. Because most of this segment is the people who are tenants. A segment that has moved from tenancy to landlord will naturally cause many rental homes to rejoin the housing market. However, this is a development that will most optimistically happen two years later. Again, since many people foresee this situation, although they can create a financing situation to buy housing, they can postpone their requests to buy housing by waiting for this situation to happen. This could create a huge drop in demand in the 2023 housing market.
Considering all these aspects, the impact of the Toki project will be aimed at reducing prices in 2023 or restraining price increase rates. However, since everything will be related to the progress of this project, this effect will decrease as the delivery of the first houses is delayed or other problems arise in the Toki project and may become an additional pressure in the direction of demand in the coming days.
How will the Turkish Economy be in 2023?
The main issue that determines real estate prices is the general course of the country’s economy. In 2022, the reason why Turkey’s inflation is many times higher than the G20 countries and the sudden stagnation in the construction sector accordingly caused an explosion in 2022 real estate and housing sales prices.
The reason for the so-called exorbitant increase in housing prices in 2022 is simply the sudden rise in demand in a market where supply is decreasing.
Can the same be true for 2023? Although it is thought that it will not be as much as in 2022, the general course of the economy will be the issue that will determine this. If inflation cannot be reduced, or at least the rate of increase cannot be stabilized, the construction sector may come to a standstill despite the Toki projects. This brings the supply completely to the point of crisis. On the other hand, it also affects demand deeply. Because many people and companies will come to the point of bankruptcy. In such a case, to ensure cash flow, investments including housing may have to be put up for sale. After all, there may be too many houses on sale. But since there is no demand, we can see that plenty of houses, land, and real estate advertisements from real estate announcement sites. After a certain point, discounts can be made on the prices of these houses out of necessity. Of course, since this is a kind of disaster scenario, we hope it will never happen. As a result, we are talking about the country’s economy being completely deadlocked, and whether the house prices in the real estate market will decrease or not will certainly not be our first problem.
How Will the 2023 Elections Affect the Housing Market?
Since 2023 is an election year, it is not a far guess to think that a large amount of money will enter the market in the period leading up to the election. Those who have access to this money until this time may want to consider it as a home, shop, office, and land investment. The fresh money that will enter the market for the first six months will stimulate the housing market. This may cause prices to increase slightly.
If the EYT Problem is Eliminated, Will This Affect Housing Prices?
In addition, many people are waiting for the EYT law to be enacted. If the law comes into force, the number of people and experts who think that the price increase will be inevitable in the housing market is not small because many people will apply to credit channels with these opportunities and there will be no obstacles in giving credit. Since this will be a variable that will act mutually with the expectation of Toki, the effect on housing prices may be limited. Likewise, housing prices still require income at rates that cannot be met with a pension. Since most banks have also limited their lending limits considerably, the dreams of many EYT holders who are waiting to own a home may be left for another year.
Will House Prices Decrease in 2023? Will it increase?
How the world conjuncture will develop will be the main determining situation in 2023. The new crises that will be experienced here will affect the housing markets as well as all the markets badly. If a balanced trend is achieved in some way, this time the country’s economy should be taken into consideration. The fact that 2023 is an election year and the election results can change everything. Given all the variables, 2023 is heading down a more uncertain path than almost any past year. In this period, whether people will avoid long-term borrowing will be the determining factor in whether the prices in the housing market will decrease. In such a case, it seems difficult for the prices in the housing market to catch high increase rates compared to other economic markets as in 2022. Rates of increase in housing prices may not be the same as in 2022. Although there is a clear reality, no year was as uncertain and unpredictable as expected as 2023.