How will property markets perform in 2023?

So, how will property markets perform in 2023?

It’s natural that in December and January we spend time reflecting on the 12 months gone and the year to come. It’s no different for us at KHI.

But, as we always say, there are no hard and fast guarantees when we look ahead. The past has told us the property market can be unpredictable.

But – certainly if you’ve already invested – perhaps the biggest surprise has been its resilience. Despite many warning of doom and gloom since 2019, property prices have continued to rise.

Financial challenges for Turkey in 2022

A year ago, we were looking forward to emerging from COVID. Things were beginning to loosen up.

However, by then, the pandemic had already left a legacy. It changed the way we do things and thus how we look at property.

Today, for example, buyers want space for gardens and offices at home. Property away from the cities has also become more popular. Prices have risen sharply in Turkey as a result – particularly along the Aegean and Mediterranean coasts.

Our offices in Turkey saw a change in policies governing applications for citizenship too. Buyers now need to invest a minimum of $400,000 if they want to qualify through a property purchase.

However, at the same time, the Turkish lira’s weak performance on the international money markets have also had an impact. Worth around five to a pound (Sterling) in 2016, it’s now at around 22 (December 2022), driving the cost of imports up sharply.

Construction costs in Turkey have therefore soared, pushing up the price of a new home. Unconventional domestic monetary policy has also failed to quell inflation, the cost of a new property rising beyond the pocket of many Turks.

War in the Ukraine

But, while locals hoping to move home may have struggled, it’s been a different story for wealthy investors from overseas.

The Turkish lira’s performance has certainly enhanced the spending power of anyone working in dollars. Turkey has also become a popular choice among Russians and Ukrainians fleeing the fighting north of the Black Sea.

Afghan, Iraqi and Iranian buyers have also been more numerous than Europeans in 2022. Nevertheless, Turkey also remains a popular choice for retirees from the UK, Germany, the Netherlands and Scandinavia looking a reasonably-priced place in the sun.

And, while that demand from overseas remains, the pressure on prices remains upwards. Despite the promise of direct government intervention, there has been no sign yet of a marked decrease in values.

Changes in Portugal

In Portugal, the year began with new restrictions on Golden Visas. Lisbon and Porto were crossed of the list of locations where applications could be made by foreign nationals purchasing property. Investors from overseas were encouraged to consider designated regions of the country’s interior instead.

The sitting government’s win in the elections also offered some stability and an opportunity to develop longer-term strategies. Measures have been introduced and considered which should free more property for Portuguese nationals also facing problems with affordability.

Many struggling to get a foot on the property ladder will still want to see a further drop in prices. However, although some of the heat may dissipate in popular regions, it’s hard to see a fall across the board in 2023.

Demand for property in Portugal has been particularly strong from America in 2022. The uncertain political situation across the Atlantic has certainly inspired a desire for a more stable environment. Fresh demand has also been recorded among buyers from the Far East, including China.

While these factors remain in play, there’s every chance interest from overseas will keep prices stable.

What’s in store in 2023?

Of course the fallout from a continued or escalating conflict in Ukraine could have a significant impact no matter where you are around the globe. Energy prices, the cost of fuel and thus the cost of living could mean the focus for many of us moves away from relocation.

Turkey also sees its own elections in 2023 which could mean a significant political change.

However, on the other hand, those more directly affected by turmoil or instability anywhere – be it the Middle East, the Americas or even Europe – may still see an investment in a new home away from the trouble spots as a sound move. Our increased mobility and global awareness means locations not even on the radar right now could be property hotspots by the time we welcome 2024.

So, while you may read many headlines at the beginning of 2023 predicting a property slump, the reality is that no one – not even the so-called experts – can say for sure.

How will property markets perform in 2023? Just like the money markets, the price of property can be affected by numerous factors – including world events – and, right now, we have no idea what they may be.

So, if you’re looking for guidance on whether to move or invest, it may be best to consider first your attitude to risk.

If you’re the sort of person who is happy to leave your destiny in the hands of fate or if you enjoy the thrill of leaving things to chance, buying a property in the coming months could still be an inspired move.

On the other hand, if you prefer to play it safe, to wait for more data on issues like Ukraine, a sea change in politics in places like America, the UK and Turkey or an upturn in global economics, staying put may feel more comfortable.

The choice is yours to make.

How can we help?

If you would like more information on buying property in Turkey or Portugal please drop us a line of give us a call. We can also help with the administration and logistics or relocation.

Alternatively, feel free to browse our blog for previous posts you may find useful. If you’d like to check out our full portfolio, you can find details of properties currently on our books right here. You can also keep up to date with our Facebook page here.