Is it the right time to buy a house?

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For the last few years, housing prices have never fallen on the agenda.  Is it the right time to get a good housing? Will prices fall?


For the last few years, housing prices have never fallen on the agenda. While some of these analyzes are based on the numbers and the data, some of them are based on the opinions of a group of self-employed experts.

A commonly used method to measure the level of housing prices is based on comparing the prices of homes to rent. In this method, which is expressed as rent multiplier, the price of the dwelling is expressed in terms of monthly or annual rent. For example, it is said that the price of a house is equal to 20 years 'rent, in other words 240 months' rent. The rent multiplier in Istanbul has risen sharply in the last ten years and has risen by 22 years (264 months) from 12 (144 months). This increase in rent multiplier means that house prices have increased faster than rents. The increase in the housing prices with a higher rate than the value of the lease which is the usage value of the residence, and therefore the increase of the rent multiplicity, is interpreted as the price of the house being overvalued by breaking from the economic bases. However, this indicator, which does not take credit interest rates into account, is not sufficiently explicable.


I think that a tenant who lives in a rental is evaluating the option of buying a house with a ten-year loan. Either they will pay rent or credit installments. Credit installment will naturally be higher than rent. In this case, they will make a decision by comparing the credit installment with the rent. The amount of installment that exceeds the rent will be the cost of buying a house. To conclude, if you have to pay 3,000 TL to buy a house you rent for a thousand TL; it is the cost of purchasing 2000 TL of housing which exceeds the rent amount. Let's just say that the interest rates of the loan are falling and the credit installment is reduced to 2500 TL. In this case, the monthly cost of buying a house without any change in the rent or the price of the house will be reduced to 1500 TL. We rate the cost of buying this residence to the credit installment, and we form a new indicator that all of the variables of price, rent and loan interest participate in the account.

According to this indicator, we can see the development of housing prices in Istanbul in the following graph. The ratio of the amount paid for housing other than rent to the credit installment has fluctuated between 65% and 75% in the last decade.


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