Istanbul—Could Istanbul become more expensive than Manhattan in New York? This question was raised by the Governor of the Turkish Central Bank, Hafize Gaye Erkan, shedding light on the soaring rental prices and the cost of living in the Turkish city, which led her to move back in with her mother, having failed to find affordable housing.
Erkan's comments sparked a broad interaction on social media platforms, and in her interview with the Turkish newspaper "Hurriyet," she observed that the solution lies in increasing the number of social housing units constructed by the state, which is currently being pursued by Turkish President Recep Tayyip Erdoğan and his aides.
The governor of the Turkish Central Bank criticized citizens who strive to buy multiple properties, stating that it should not be the case for one person to own 10 houses, but rather every 10 people should have one home.
Erkan assumed the presidency of the Turkish Central Bank in June, becoming its fifth head in the last four years. She previously held the positions of co-CEO at "First Republic" Bank in America and General Director at American Goldman Sachs Bank.
Erkan's statements came a week after a tweet from the Turkish Minister of Treasury and Finance, Mehmet Şimşek, indicating that rental prices had begun to decline, especially in major cities, suggesting that the housing supply would increase further next year. This opened a wide door for debate and criticism.
Turkish social media users discussed Hafize Erkan's remarks, questioning the situation of an ordinary citizen, while the governor of the Turkish bank, who earns a monthly salary of 161,000 Turkish Lira (about $5,544), complains about the high costs of living.
Turkish journalist Melih Okur questioned the real reason behind the Central Bank governor moving in with her mother, refuting the possibility that she was unable to afford rent.
"Why does the governor of the Turkish bank live with her mother? I couldn't figure that out. She isn't in a position that can't afford the rent. Her husband manages a robust investment fund, and she has worked at the highest level in critically important banks…".
Turkish opposition Democratic Party member of parliament, Cemal Enginyurt, commented, "Finance Minister Mehmet Şimşek said that home rents in the major cities are on a decline, while the Central Bank Governor says she couldn't find a home in Istanbul due to high prices and moved to live with her mother. The country's economy is in the hands of these people, economists who don't know each other."
Economic affairs researcher, Mohamed Abu Alian, comments on Al Jazeera Net saying, Erkan's statement is part of the discussion about the difficulty of addressing the inflation issue with traditional methods alone. The Turkish Central Bank has been implementing a tight monetary policy since the middle of this year.
He adds that addressing the problem of rising rents in Istanbul requires other methods besides economic techniques.
Abu Alian emphasizes the urgent need for actions to maintain the stability of the Turkish Lira's exchange rate and prevent its deterioration, as the exchange rate is significantly linked to rental values because property owners often peg rent prices to foreign currencies. Therefore, any depreciation in the local currency results in increased rental costs.
He calls on the Turkish government to intervene by increasing the number of residential units available in the Turkish market, either through construction facilitation for citizens and construction companies, or by accelerating the construction of social housing currently underway.
Abu Alian stated that Erkan's remarks might be a negative indicator for the Turkish economy in general and could lead to effective government policies and new economic methods to solve the crisis through real and efficient structural reforms.
A study published by Bahçeşehir University in Turkey last August indicated that rents increased by 121% in Turkish cities over the past year, with the rise reaching 188% in major cities such as Ankara, Istanbul, and Izmir.
Recently, disputes between landlords and tenants over rising rents have led to an increase in litigation in the courts.
