Is there a property bubble price in İstanbul?

7 April 2019

Real estate Bubble can be understood by looking at two metricsA. Affordability indexHow expensive houses are in relation to what most people can afford. When this is too high, then house prices first stall then decline.B. Mortgage as a Percentage Of IncomeActual monthly cost of the mortgage to family income. When the ratio gets too high, households become increasingly dependent on rising property values to service their debt. World average on affordabilty index ratio is 12 and this ratio is only 6 in İstanbul. Also, world average mortgage payment as a percentage of income is 140%, whereas this rate is only 80% in Turkey. Furthermore, in Europe and North America, downpayment of a mortgage ranges anywhere between 1% to 10%. However, one has to pay at least 25% of the house value as a deposit in Turkey. Also, this loan has to be covered in 10 years maximum unlike the world average of 25 years. This simple check step avoids property prices to grow Therefore with this security check in place, and no mathematical evidence of property bubble price in the key metrics, we can conclude that there is still significant room for property prices to grow in Turkey.