Last Updated on October 22, 2024 by Ideal Editor
Turkey’s housing market rebounds, reaching levels last seen in 2022 after a long slowdown. In September, sales of pre-owned homes increased by 33%, while new home sales surged by 47%.
Rebound in Mortgage Sales
A resurgence in mortgage-based sales also supports this recovery in the housing market. In September, mortgage-backed home sales nearly doubled compared to the same period last year. However, for 2024 overall, mortgage sales are still down by 42% due to the high interest rates. Domestic banks are charging monthly rates above 4%, making it difficult for buyers to secure affordable home loans.
Third Consecutive Month of Higher Sales
September marked the third consecutive month of increasing home sales. The Turkish Statistical Institute (TurkStat) reported that over 141,000 residential properties were sold in September. This represents a 37% year-on-year increase and the highest sales figure since December 2022. The market has also rebounded from a low of 79,000 homes sold in June, showing significant improvement.
Cooling Prices and Growing Investment Appeal
One of the key factors driving the market’s resurgence is the slowdown in home price increases. The Central Bank of Turkey (CBRT) reported that housing prices rose by 1% in September, with an annual nominal increase of 27%—the lowest growth rate since July 2021. Adjusted for inflation, the residential property price index actually dropped by 15% year-on-year, indicating that inflationary pressures in the market are easing.
This decline in prices is attracting more investors. Real estate economist Ahmet Büyükduman noted that rising rental costs have made buying a home more attractive, as the ratio between purchasing and renting has become more favourable for investment. He also reported increased interest in lower-end properties, particularly those valued at less than $100,000.
2024 Year-to-Date Sales on the Rise
Following strong performances in July and August, the September results have pushed total home sales in 2024 to 947,000, a 5% increase compared to the same nine-month period last year. However, high interest rates and restricted access to credit continue to hold back the market’s full potential. Büyükduman highlighted that the issue is not just high interest rates but also loan limits imposed by banks. “If I already own a house, I can only borrow up to 20% of its value, leaving me with very little leverage,” he said.
Turkey’s housing market is gaining momentum due to cooling prices and increasing investment returns. However, high mortgage interest rates and lending limits continue to restrict the sector’s growth. Nevertheless, the recent surge in overall sales indicates a strong recovery is underway.
5 FAQs About Turkey’s Housing Market Rebounds
- Why has Turkey’s housing market rebounded to 2022 levels?
Turkey’s housing market has seen a significant rebound due to cooling property prices and increased potential for investment returns. With price hikes slowing down after a long period of inflationary pressure, more buyers are entering the market, contributing to the highest sales figures since December 2022. - What factors are driving the increase in home sales?
The primary drivers are the affordability of properties, with prices stabilizing, and the growing appeal of real estate as an investment due to rising rental costs. Both new and pre-owned home sales have surged, with new home sales up by 47% and pre-owned home sales rising by 33% in September. - How has mortgage availability impacted the housing market?
Although there has been a resurgence in mortgage-backed sales, with almost double the number of sales in September compared to last year, high interest rates continue to limit mortgage affordability. Mortgage sales are still down by 42% overall in 2024 due to high monthly interest rates, which remain above 4%. - Why are property prices cooling in Turkey?
After a period of rapid price increases, property prices have started to cool. The Central Bank of Turkey reported only a 1% rise in home prices for September, with an annual increase of 27% in nominal terms—the slowest rate since July 2021. When adjusted for inflation, real property prices have actually fallen by 15%, which has helped make homes more affordable. - What challenges are still affecting Turkey’s housing market?
While home sales are rising, challenges remain due to high interest rates and limited access to credit. Lending restrictions prevent buyers from borrowing more than 20% of a property’s value, limiting their ability to leverage financing, which is slowing down growth in the market despite rising demand.
