Turkey's residential property sales reach yearly high, despite elevated interest rates
Turkey's Housing Market Shows Signs of Recovery
Turkey's housing market is showing promising signs of recovery, with industry officials predicting a sustained period of growth in the coming years. The latest data reveals a significant increase in home sales, a decrease in inflation, and a renewed interest in mortgaged sales.
Ismail Özcan, president of GAPAS, suggests that the increase in mortgaged sales despite high borrowing costs indicates a renewed rise in the motivation to transition from renting to homeownership. This sentiment is echoed by Engin Keçeli, head of INDER, who believes high interest rates, the slowdown in price increases, affordability in certain segments, and surging rents are compelling people to buy.
The seven-month total sales from January through July reached 834,751 units, the second-highest seven-month total ever. This represents a 24.2% increase from the same period last year. July 2022 sales figure is the second-highest ever recorded for the month. The capital Ankara had 12,491 sales, while the Aegean city of Izmir recorded 7,815 sales, following Istanbul's 23,152 units sold.
Industry representatives expect total sales for the year to surpass 1.5 million units. Sales in the whole of 2024 are projected to grow by 20.6% to approximately 1.48 million units. Yılmaz believes improving credit conditions and development of suitable land are crucial for maintaining a positive outlook.
The market is expected to enter a "cooldown" or correction phase rather than a crash, with slower nominal price growth and possible declines in overheated or luxury segments. Well-located, high-quality, and earthquake-resistant properties are predicted to retain value better, pushing investors to adopt more selective and strategic approaches.
The Central Bank of the Republic of Türkiye (CBRT) reduced its key policy rate by 300 basis points to 43% in July. This, along with the declining inflation and reduced interest rates, is seen as a key driver for continued market activity. Ziya Yılmaz, head of KONUTDER, believes the sales will continue to rise due to these factors.
However, Keçeli expects sales to continue rising, but supply-side challenges are a concern. In fact, residential property sales in Türkiye increased by 12.4% year-over-year in July, reaching 142,858 units. Yet, sales to foreigners decreased by 18.6% to 1,913 units last month. This situation, where July traditionally is a period marked by rising sales to foreigners, has reversed this year.
Despite this, industry officials project a cautiously optimistic outlook for Turkey's housing market in 2025, characterized by strong sales supported by easing credit conditions but tempered by a market correction from previous rapid price increases. This indicates a transition from rapid speculative gains to a more stable, sustainable housing market environment in Turkey.
Ankara and Istanbul are cities in Turkey that have experienced increased business activity in the housing market, with Ankara recording 12,491 sales and Istanbul 23,152 sales in July 2022.
Turkey's economy, aside from the housing market, also displays signs of recovery, with the Central Bank of the Republic of Türkiye (CBRT) reducing its key policy rate by 300 basis points to 43% in July, aiming to drive continued market activity and support the housing market's sustained growth.
