Top European Cities with the Highest Property Price Increases Since 2015

Discover which European cities have seen the biggest spikes in property prices over the past five years. Find out where to invest wisely.

The real estate market in Istanbul is experiencing a significant surge in prices, with apartments now competing closely with those in notoriously expensive cities like Paris and London. Over the past nine years, Turkish house prices have skyrocketed, increasing by 12 times in nominal terms. This surge in prices is particularly striking when compared to other OECD member states, with countries like Sweden and Finland seeing more modest increases of just over 4% since 2015.

Turkey and Hungary stand out at the other end of the spectrum, with prices in these countries soaring by 166% and 168% respectively in just a few years. The rapid escalation of housing prices in Turkey has pushed rental prices to unprecedented levels, making it difficult even for the country's central bank governor to afford rent.

The surge in Turkish housing prices can be attributed to a combination of factors, including high inflation rates and aggressive monetary policy measures. In 2022, Turkey's inflation rate exceeded 50% for most of the year, peaking at over 80% in October. Despite these challenges, real-term house prices have also seen a significant increase, climbing by 96.7% by the third quarter of 2023 when adjusted for inflation.

The impact of these soaring prices is felt most acutely by homeowners with mortgages, as monthly rates have skyrocketed due to the country's high inflation levels. The Turkish central bank's decision to raise the benchmark interest rate to 45% in January 2024 has further exacerbated the situation, with mortgages now carrying an annual interest rate of 40%.

Foreign buyers, particularly Russians and Iranians, have played a significant role in driving up property prices in Turkey. In Antalya, prices surged by 230% in just one year, largely due to cash purchases by Russian and Ukrainian citizens. While demand from foreign buyers has contributed to price increases in certain locations, the overall surge in prices across the country cannot be solely attributed to foreign investment.

As the Turkish property market grapples with high prices, interest rates, and inflation, the future remains uncertain. While house prices continue to rise in nominal terms, they are falling behind inflation in real terms. High construction costs and limited supply may further complicate the situation, but a potential drop in interest rates could stimulate growth and alleviate the current stagnation.

Investors looking to enter the Turkish property market may find opportunities amidst the challenging landscape. With stubbornly high rental prices and limited affordability for homebuyers, cash buyers may find room to invest. Despite the current challenges, there is potential for growth and recovery in the market if demand increases and interest rates become more favorable.

The Turkish property market is facing unprecedented challenges, with soaring prices, high interest rates, and declining affordability. While the future remains uncertain, there are opportunities for investors to navigate the market and potentially capitalize on the current conditions.