Türkiye leads Europe in housing rent increases despite government ceiling

Türkiye has topped European countries in housing rent increases, marking a staggering rise of 125.10 percent from May 2023 to May 2024, as reported by the European Statistical Office (EUROSTAT). Despite the government’s two-year imposition of a 25% ceiling on rent hikes, which aimed to curb excessive rises, Türkiye experienced the highest surge. Hungary followed with a notable increase of 12.80% during the same period.

The 25% ceiling, initially introduced through a temporary article in Türkiye’s Code of Obligations on June 8, 2022, and enforced by Law No. 7409 published in the Official Gazette on June 11, 2022, aimed to control rent increases in lease agreements renewed annually. However, the measure’s effectiveness has been questioned as rental prices surged significantly during its application period, which is set to expire on July 1, 2024.

According to real estate evaluation platform Endeksa, nominal rental prices across Türkiye rose by 265% during the two-year duration of the ceiling on rent increases. Treasury and Finance Minister Mehmet Simsek indicated no plans to extend the regulation beyond its expiration date.

If the ceiling is lifted, future rent increases are anticipated to align with Türkiye’s annual inflation rate. The Consumer Price Index (CPI) for May, announced by the Turkish Statistical Institute, stood at 75.45%, prompting Minister Şimşek to announce the start of a disinflation process. He expressed optimism that annual inflation could decrease below 50% by the end of the third quarter, citing market expectations of further declines in the coming months.

Achieving price stability remains a priority for Türkiye’s economic policy, with Minister Simsek emphasizing the government’s commitment to supporting the disinflation process through strengthened fiscal discipline and strategic measures.