Keith’s Weekly Property News December 12-2021
The notes will be light in content this week, reflecting the generally moribundl state of the property market. Followed by a few off weeks, this was easily the slowest week of the year for us. I might have inadvertently copied and pasted this comment right out of last week’s notes.
Sellers are staying away from the market and our supply of viable properties has been reduced to a trickle. I suppose in many ways, the important event will be the Central Bank meeting next Thursday. Will the government flinch on its path to cut rates, or go full steam ahead, as has been pretty clearly indicated? Has this been more or less priced in at this point or is there more pain ahead? This could be yet another critical week for the much beleaguered local currency.
Our strategy this week will be to take a broader survey of the market and try to get a sense of the direction it may take. How soon will people adapt to what seems to be the new norm? I am always surprised by my local counterpart agents who just see it is as quite normal that prices would follow up the dollar so quickly. I always ask, “Do you think you can find buyers at this level?”
Usually, that is met with a shoulder shrug or some kind of non-committal comment lacking any analysis. I usually cajole them into dropping the listing, citing that throwing up unrealistic prices on the internet can only negatively distort the market. But in an already fragmented market, where agents typically only have a small stock of properties, they seem reluctant to do so. I am seeing some of these over-priced items staying on the market for months and months, then suddenly to have their prices raised again. A big “No. thank you” to those. Many clients have sent me links with these repeat offenders and I shoot them down quickly, noting that they were asking 1 million lira in September, could not sell, and are now asking 1.4 million. It is just impossible for me to view these as “actionable” properties. I have been pretty brutal about quashing these. I try to be open minded and not too dismissive, but I know the price history of many of these laggards very well. They were properties we passed on during the old price regime, so accepting them back into the fold at even higher lira prices seems like pure folly.
We think enough time has past, however, that we might want to take a look again at some of those properties that have remained on the market, but have not raised prices. If the prices were to be raised, surely the agents have had enough time to adjust those, or at least have had some dialogue with the owners since the currency debacle intensified 3 weeks ago. The heuristic of my arithmetic has me deducting 20% in lira terms and if that number makes sense, perhaps we can engage. It is a kind of meeting in the middle and rejection of moving up the full 40 to 50%. It, in theory, means the USD buyer will have achieved some discount vis-à-vis a month ago.
If I look at the non-property factors, I see some tail winds for the property market. Tourism is massive and looks set to continue, with Istanbul bringing in record numbers of tourists from every corner of the planet. As one of our leading Digital Nomads Andreas Gerdes notes, we will soon have 400 million Indonesians with right to visa free travel to Turkey. This is fairly epic. Indonesians who have the financial ability to travel to Istanbul will certainly be enticed by this, not to mention the cultural, religious, and social ties between the two countries.
Exports seem to break records every month. Several big ticket contracts have been signed with GCC countries, notably with the UAE, perhaps portending a thaw in the relations between the two countries, which had been a bit icy after the events surrounding the removal of the Muslim Brotherhood from power in Egypt. Qatar and Turkey surge forward with unprecedented levels of cooperation. Will Saudi, with infinite petro-bucks, be included in the charm offensive of President Erdogan?
Mortgage rates are going down, yet still not enough to stimulate serious buying. A meaningful reduction will surely bolster property prices if millions of Turks are able to extend loan periods from, say, an average of 5 years to 10 years.
There was much talk of mass protests a week or two ago, though I have seen no sustained evidence of this. I have always maintained that the summer months are more conducive for these types of protests. Nothing cools the revolutionary fervour faster than getting a blast from a water cannon on a windy and cool December day.
On an anecdotal level, the inflation feels outrageously high. Taxis and Starbucks are still a great deal, so added to your itinerary should be an afternoon driving around the city in the back of a cab, sipping lattes and taking it all in. It will cost you surprisingly little. As one of our other distinguished members Terry quipped, he has become a more generous tipper. I mean 5 lira is like 30 cents, so how could you grudge a hardworking taxi driver that after a 20 minute ride that might cost 3 0r 4 bucks? Also, I am stockpiling on T shirts, as they seem relatively good value lol. Did I just use “lol” without the slightest bit of irony? It must be a lagging indicator for a perturbed state of mind.
So with your cheap T-shirt -and hopefully some pants for the sake of modesty -1 buck Latte, and souped up taxi at 15 bucks an hour, where on earth do you go to look for properties?
Again, let us go then, you and I, while the Istanbul evening is stretched out against the sky….
Property links to be distributed during zoom session.