Define the decision
For a real-return comparison, use inflation adjustment: approximately, real return = (1 + nominal return) ÷ (1 + inflation) − 1. Do not simply subtract large percentage changes; state the inflation index and period used.
Evidence to retain
Topic-specific tests
Official data point
When to stop
Turn findings into a decision
Execution checklist
Inflation-Adjusted Property Return
Nominal property return can look positive while real purchasing-power return is negative. Calculate real return using a clearly stated inflation measure and period instead of subtracting an unrelated headline rate.
Apply inflation consistently to both income and value: rents, operating costs and exit value may adjust at different speeds. A single inflation adjustment to the final sale price does not make the whole cash flow real.
For foreign investors, real return and currency return answer different questions. Show TRY real performance and base-currency performance separately so inflation and exchange-rate effects are not double-counted.
How should “Apply inflation consistently to both income and value: rents, operating” be applied specifically in Inflation-Adjusted Property Return?
Apply inflation consistently to both income and value: rents, operating costs and exit value may adjust at different speeds. A single inflation adjustment to the final sale price does not make the whole cash flow real.
How should “Nominal property return can look positive while real purchasing-power return” be applied specifically in Inflation-Adjusted Property Return?
Nominal property return can look positive while real purchasing-power return is negative. Calculate real return using a clearly stated inflation measure and period instead of subtracting an unrelated headline rate.
How should “For foreign investors, real return and currency return answer different” be applied specifically in Inflation-Adjusted Property Return?
For foreign investors, real return and currency return answer different questions. Show TRY real performance and base-currency performance separately so inflation and exchange-rate effects are not double-counted.
Moving from nominal return to purchasing power
Real return should be built from dated cash flows rather than by casually subtracting two percentages. Record purchase price and costs, net rents, expenses and sale proceeds at their dates, then use the appropriate official CPI series to express values in a common purchasing-power basis. “Property rose 20% while inflation was 15%” can illustrate the idea but is not a substitute for cash-flow treatment when rents and expenses occur across years.
Do not confuse the housing price index with consumer inflation. The TCMB RPPI describes the housing market, while CPI is a general consumer-price measure used for purchasing power. The investor’s real net return reflects actual costs and tax position and can therefore differ greatly from published index growth. Retain each series name, period and comparison base so the calculation can be reproduced when data are revised or refreshed.
Real return asks whether the investment increased purchasing power, not merely whether its lira price rose. Use a consistent inflation measure for the same holding period and include the property cash flows that actually belong to that period: acquisition cost, rental income, recurring costs and disposal costs. Keep nominal appreciation separate from inflation adjustment so a high nominal gain is not presented as an equally high real gain.
For a real-return comparison, use inflation adjustment: approximately, real return = (1 + nominal return) ÷ (1 + inflation) − 1.