Real Estate

Turkish house sales rise as interest rates fall

January 21, 2025, 4:23 PM

A residential street in Istanbul. Turkish house sales rose in December and the trend is expected to continue

Residential sales up 20%
One-third are new builds
Interest rate cut expected

Turkish house sales rebounded strongly in 2024, driven in part by a surge in December prompted by a long-anticipated interest rates cut, and further reductions in borrowing costs are expected to fuel appetite in the market this year.

Residential sales increased 20 percent last year, with just under 1.48 million units sold, up from the 2023 total of 1.22 million.

In December alone there were 212,000 transactions registered, up 53 percent year on year, as the Central Bank cut its key lending rate from 50.0 percent to 47.5 percent, which helped to increase sales.

Roughly one-third of all sales last year were of newly constructed houses, marginally higher than the 2023 level.

The rise in house sales could be given further impetus on January 23 – when the Turkish Central Bank’s monetary policy committee is to meet – as another cut to its key interest rate is widely forecast.

While both buyers and sellers will welcome another rate reduction, the bank itself will be watching the acceleration in residential sales – as higher demand in the housing market could feed into inflation, which closed out 2024 at 44.38 percent.

Inflationary pressures or not, the demand for housing is expected to expand this year, according to real estate economist Ahmet Büyükduman.

“Since the second quarter of 2024 the housing sales graphic has gone upwards and I expect this trend to continue this year,” he told AGBI. “2025 is a candidate not only to break last year’s sales numbers but set a record high for annual sales.”

A cut in interest rates also entices investors into the housing market as savings accounts offer lower returns, Büyükduman said. “Even those who can pay in cash will dock their money in real estate with the expectation of an increase in property values,” he said.

Despite the general uplift, their was a contraction in foreign buyers last year. Sales to overseas buyers dropped almost a third year on year to 23,800, although there was a 17 percent increase in sales for December, in line with national trends.

This fall was partly a result of the government increasing the minimum investment for foreigners to qualify for citizenship from $250,000 to $400,000, said Büyükduman, along with domestic pressures to reduce real estate sales to overseas buyers. However, the decline merely flattened out a short-term spike.

“The level of foreigners buying into the market returned to its normal rate of 1.5 percent of total sales,” he said, “which was what its share was before the citizenship scheme was introduced.”