Turkey might not be the safest or most stable place in the world after recent events, but that doesn’t stop the country topping the global house price growth charts.
Knight Frank’s Global House Price Index for second quarter 2016 shows house prices in Turkey grew by 14 percent in 12 months through June 30, a fall from the 19 percent annual number in the previous quarter but still enough to keep the country — seen as a bridge between Asia and Europe but whose loyalties and place in the world are being tested by a number of political and socioeconomic pressures — on the top of the global table.
On an inflation-adjusted basis, though, Turkey’s 7 percent plus inflation rate would see it slip to 13th place in the index, and New Zealand would take top place.
Established in 2006, the Knight Frank Global House Price Index allows investors and developers to monitor and compare the performance of mainstream residential markets around the world. The index is compiled on a quarterly basis using official government statistics or central bank data. The top 10 in the index, which covers 55 countries, is given below.
Knight Frank Global House Price Index, Q2 2016
Change between Q2 2015 and Q2 2016
- Turkey, 13.9%
- New Zealand, 11.2%
- Canada, 10.0%
- Chile, 9.4%
- Sweden*, 8.9%
- Malta**, 8.8%
- Austria, 8.1%
- Iceland, 8.1%
- Mexico, 8.0%
- Germany, 7.9%
* provisional
** asking prices
Source: Knight Frank
Although Turkey is not flavor-of-the-month among world governing bodies and leading economies, due largely to the Islamist-leaning policies of its hardline and erratic president, Recep Tayyip Erdoğan, and his over-the-top reaction to the recent attempted coup, it remains a country with a high GDP growth rate, a rapidly growing population, a high level of urbanization, a burgeoning middle class and all the demands of upwardly mobile and increasingly prosperous people — including a natural wish for better residential housing. Lower economic growth in recent years has seen a fall back in the volume of new residential construction, resulting in the price rises seen in the Knight Frank index.
One cautionary note: anecdotal evidence suggests a significant element of the residential housing in Istanbul, with a population of 14 million Turkey’s largest city and which uniquely in the world straddles two continents, has been built illegally and does not meet modern earthquake standards. Like other high-risk earthquake locations around the world, Istanbul is waiting nervously for the “Big One.”
The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.
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Richard Fleming is editor of Institutional Real Estate Europe.
