Housing Supply Surge in Earthquake Zone Dampens Rental Inflation

An unexpected surge in housing supply is slowing rental inflation in the earthquake zone and easing overall price pressures.

Rapid Rise in Housing Stock

■Government‑led reconstruction projects lifted building permit shares from 12% to over 20% in the affected region.

■By 2025, delivery speed of new homes accelerated by roughly 30% compared with previous years.

■The boost trimmed construction capacity redirected outside the zone by 15%.

Regional Dynamics of Rental Inflation

■In 2023 and 2024, rental growth in the quake‑hit provinces ran 2.5 percentage points above the national average.

■2025 saw rental increases slow to 1.2%, and by 2026 they fell to 0.6%.

■The return migration reduced demand for rental units in neighboring provinces by about 8%.

Geographic Shift in Construction Employment

■Construction employment within the earthquake region began a 4% decline.

■Outside the region, especially in the Marmara and Aegean areas, jobs rose 9%.

■This trend is prompting raw‑material and equipment supply chains to pivot toward new hubs.

Central Bank Insights and Inflation Impact

■The Central Bank of the Republic of Turkey (CBRT) estimates the housing‑supply surge could cut rental inflation by 0.7 percentage points.

■Analysts link this to a 0.3‑point moderation in overall consumer‑price inflation.

■In the longer run, a strengthened regional housing stock may signal price‑index stability.

Analyst Commentary (Ufuk Tepe): The post‑earthquake reallocation of construction capacity reshapes not only the housing market but also raw‑material supply chains and heavy‑industry production plans. While the softening of rental inflation offers a breather for consumer spending, it may trigger demand fluctuations in the automotive and energy sectors; flexible manufacturing and inventory strategies will remain pivotal during this transition.