We will explore the concept of a real estate bubble in Turkey, introduce you to the factors that can contribute to the emergence of a real estate bubble, and take a look at its impact on the economy and real estate market and we will also look at ways investors and buyers can take to protect themselves and sustain their investments in the face of this economic phenomenon.

What is meant by the real estate bubble in Turkey?

A real estate bubble is a type of economic bubble that usually appears in real estate markets both locally and globally and this bubble is characterized by a rapid and excessive surge in real estate and land prices, significantly exceeding their normal value and these prices later decline suddenly or gradually, and this decline often increases after a period of stagnation and declining demand.

What are the causes of the real estate bubble in Turkey?

1. When the economy is experiencing strong growth and rising prosperity, the demand for real estate increases significantly and investors buy real estate as a way to preserve their wealth and participate in the continued rise in prices.

2. Real estate markets may experience a large influx from certain segments of the population that exceeds their economic capacity to absorb this increase in supply, increasing demand and raising prices.

3. When the criteria for granting mortgages are easy, buyers tend to purchase properties easily, which increases demand and pushes prices higher.

4. Advanced real estate marketing strategies, including installment sales, discounted properties, and financing packages, show a positive impact on motivating buyers and making the purchase affordable.

5. Some individuals and companies involved in the real estate market may contribute unrealistic estimates of real estate prices and inflate prices unsustainably.

6. Domestic and international inflation surges are an important factor, as rising raw material and construction costs can lead to an increase in the cost of new properties, pushing up real estate prices.

7. Announcing large development projects in certain areas can encourage higher property prices in surrounding areas, due to increased demand for nearby properties.

Signs indicating the approaching real estate bubble in Turkey

One of the signs that this type of bubble is approaching is the rapid increase in real estate prices, as home ownership becomes out of reach for many buyers and this price increase appears unrealistic and unacceptable, making it a strong indicator that a bubble is likely and this excessive rise is accompanied by a decline in the volume of purchases, as fewer buyers can afford these inflated prices.

Moreover, we can observe the exit of large investors in the real estate market, as they make profits from their investments before the bubble bursts or in the first stage of its emergence and these signs are early signs of a real estate bubble and predictions of unsustainable trading in real estate prices.

Burst of the real estate bubble

1. When the causes and indicators combine, the real estate bubble bursts and in this context, construction companies continue to build more properties in response to the decreasing demand that has become evident recently and this increase in supply reduces demand, resulting in a slowdown in sales rates and a decrease in price increases.

2. As sales decline and prices stop rising, awareness of risks in the market begins to emerge, and those risks can be understood through several factors and these factors include increasing interest rates, which make purchasing property difficult for many buyers, and in some cases may lead to financial stress on existing property owners.

3. As a general economic downturn occurs, disposable income decreases, job losses increase, and job vacancies decrease, leading to decreased demand for real estate and a recession.

4. As the market mood changes, credit standards tighten and demand decreases as supply increases, speculators leave the market. Prices start to fall.

5. It is beneficial in the real estate market for supply and demand to achieve an acceptable balance that reflects the reality and reality of the market.

What are the disadvantages of the real estate bubble?

1. Among the main disadvantages of the real estate bubble is the spread of short-term investment and intense speculation in the real estate market, which creates many negative impacts on the economy and this can include a sharp decline in property prices, where their price exceeds the market value of the property.

2. As a result, negative impacts are increasing, most notably bankruptcy, deteriorating access to affordable real estate, and a significant decline in economic activity and in addition, it is difficult to accurately predict the results of the bursting of a real estate bubble, and it may be difficult to determine whether it is a real bubble when it occurs, and its effects on the ground are sometimes difficult to determine.

Tips to avoid a real estate bubble

If you own a property in an area where property prices are rising, you may consider selling the property and taking advantage of the rise in prices and the investment return that can be achieved, but you should be careful and decide carefully, especially if you are not planning to move to another area or if you can keep the price difference andi f you are not planning to move or invest in another property, selling can expose you to the risk of competing with other buyers in the market and potentially causing new price inflation.

If you are looking for a property to buy, the idea of ​​postponing the decision for a while can be beneficial and this can give you the opportunity to anticipate and evaluate the market carefully before making a final decision and it may be wise to avoid overpaying at a time when the market is experiencing price inflation.

In conclusion, the term “real estate bubble” is an economic phenomenon that causes concern in Turkey and in many real estate markets around the world and it is a phenomenon of excessive and unsustainable rise in property prices, which exceed their real market value and this rise is often associated with market inflation and increased demand, and may result in significant negative impacts on the economy and society.

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