Developers in Istanbul are reporting a hike in sale to foreign investors during December 2013, fuelled by investors taking advantage of a slump in the value of the Turkish Lira against other major currencies.
The recent drop in the value of the Lira against the US Dollar and Sterling has increased the spending power of foreign investors, many of whom decided to invest before the Turkish central bank’s aggressive interest rate hike last week.
Since the rate rise at midnight on 28th January, the Turkish Lira has recovered slightly, however it still has some way to go before it makes up ground it lost towards the end of 2013 and early 2014. Inevitably, the rate increase is likely to have a cooling effect on property prices in the short term, as the cost of a mortgage rises with interest rates. In istanbul_province”>Istanbul property prices have continued to rise, albeit at a slower pace than typical of the past three years.
However, more expensive mortgages can have a positive effect for investors in Turkey’s buy-to-let market – as loan get less accessible to local Turks, more will revert to renting.
Property prices in Istanbul increased by up to 13.62 per cent in 2013 and overall the price of new homes in the city have increased by nearly 50 per cent in the four years since January 2010. Turkey‘s currency slump is seen as part of wider emerging market problem as the United States begins to ease back on quantitative easing and investor money returns to take advantage of a strengthening US Dollar.