Housing market in Turkey bounces back to 2022 levels

Alamy via Reuters

• Mortgage purchase rebound
• Third month of higher sales
• Real property RPI falls 15%

Cooling prices and increased potential for strong returns on investment have fuelled a rebound in the Turkish housing market, with sales hitting heights not seen in almost two years. 

Just under 141,000 residential properties were sold in September, a 37 percent year-on-year improvement, and the best result since December 2022, data from the state statistics agency Turkstat on October 17 showed. 

September was also the third straight month of increased sales, recovering from a trough of 79,000 in June.

There was strong growth both in new homes, up 47 percent for the month, and in pre-owned sales, up 33 percent. 

After accelerated results in July and August, the September total took sales for 2024 to 947,000, up 5 percent on the same nine-month term last year. 

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One reason for the uptick in sales is that the property market is becoming more affordable, after an extended period of above-inflation price increases, a new report by the Turkish central bank said.

The bank’s monthly residential property price index, reporting on real estate price movements across Turkey, showed a monthly increase in housing prices of just 1 percent for September, with an annual rise of 27 percent in nominal terms, the lowest rate of increase since July 2021. 

However, taking into account the consumer inflation rate, the residential property price index actually fell by 15 percent in annualised terms, further evidence that inflationary heat is going out of the market.

The potential returns on property investment, along with the fall in prices, are increasing the appeal of the housing market, real estate economist Ahmet Büyükduman said.

“Rental costs have become very high, so the ratio between purchasing and renting has come to an attractive level for investment,” he told AGBI.

There seemed to be more activity in the lower end of the market, properties valued at less than $100,000, Büyükduman said.

There was also a strong rebound in purchases through mortgages, with almost 16,000 such sales posted in September, almost double the total for the same month last year.

However, overall mortgage sales for 2024 are still down 42 percent year on year, an indicator of the high interest rates charged by domestic banks for housing loans, with standard lending rates of around 4 percent or more per month. 

While house sales are gaining momentum, a lack of access to credit is still holding back growth in the sector, Büyükduman said, with state-imposed caps on borrowing restricting access to the market.

“The problem in taking credit loans is not only the issue of high interest rates, there are also limitations applied to the loan,” he said. “If I have a house, I can only borrow a limited amount of the property’s value, just 20 percent, which leaves me no leverage.”