How is the Turkish housing market feeling? Analytics from REALTING

From 2020 to 2022, the Turkish residential real estate market showed record activity. During this period, the annual number of purchase and sale transactions with residential real estate almost reached 1.5 million. However, the events of 2023 led to a drop in market activity. Our analytical material is devoted to the state of the Turkish housing market in 2024.

According to the Turkish Statistical Institute, since 2013, more than 1 million residential real estate purchase and sale transactions have been carried out annually in the Republic of Turkey. The peak of activity occurred in the period from 2020 to 2022: during this period, the annual number of purchase and sale transactions reached almost 1.5 million.

However, the events of 2023 have made their own adjustments to the Turkish residential real estate market:

• In February 2023, a devastating earthquake occurred in Southeastern Turkey, which claimed the lives of tens of thousands of people, and destroyed and damaged, according to various estimates, more than 150,000 buildings. In the most affected provinces, housing market activity decreased by 1.5–2.2 times by the end of 2023. The earthquake revealed problems in the Turkish construction industry: it was followed by building inspections for earthquake resistance throughout the country. 
• Turkey has been experiencing high inflation for a long time. Throughout 2023, the Central Bank of Turkey raised its key interest rate to combat it. In 2023, the key rate increased several times, which led to an increase in the cost of loans, followed by a decrease in market activity.

As a result, 2023 showed one of the worst results in the Turkish housing market – 1.23 million purchase and sale transactions with residential real estate, which is 17.5% less than in 2022. 

Turkey’s housing market in 2024

According to the Turkish Statistical Institute, 672,162 residential real estate purchase and sale transactions were registered in Turkey in January-July 2024, which is comparable to the same period last year and 18.1% less than in January-July 2022. 

The most transactions were made in Istanbul – 112,099 (about 17% of the total number of transactions in the country). Ankara is in 2nd place with 58,896 transactions (9%), followed by Antalya – 37,703 (6%), Izmir – 36,771 (5%), Bursa – 24,974 (4%).

* – January-July 2024

The share of the primary market in residential real estate purchase and sale transactions for the period from January to July 2024 amounted to 32% (214,108 transactions). This is comparable to what has been observed in previous years: since 2020, Turkey’s primary market share has been 31% of the total number of transactions per year.

* – January-July 2024

Since 2020, the share of leveraged transactions in Turkey has been decreasing. Over the past 7 months of 2024, only 9% of transactions were made with borrowed funds, which is 11 percentage points less than in the same period last year (in January-July 2023, 20% of transactions were made with borrowed funds). 

* – January-July 2024

The reason for the lack of public interest in housing loans is the high cost of these loans. Thus, according to the Central Bank of the Republic of Turkey, the weighted average interest rates on bank loans for the purchase of housing in 2023 increased almost 2 times. 

Such a sharp increase in loan rates occurred due to the fact that, in order to combat the high level of inflation (which has been observed in Turkey in recent years), the Central Bank raised the key rate throughout 2023: in 2023 it increased several times, and as of August 2024 it remains at the level of 50%.

It is worth noting here that the Central Bank’s policy to combat inflation is bearing fruit. Thus, for the period from January to August 2023, the average monthly inflation rate was 4.63%, and for the same period in 2024, the growth rate was 3.54%. 

And what about the prices?

According to the Central Bank of Turkey, the residential real estate price index (2023 = 100), which measures the change in housing prices in Turkey, amounted to 141.32 points in July 2024, which is 0.9% more than in the previous month.

According to the results of the 2nd quarter of 2024, the Central Bank of Turkey provides the following average housing prices in the Turkish provinces: Istanbul – 49,000 TRY/sq.m (Turkish lira per square meter), Ankara – 26.719 TRY/sq.m, Izmir – 36.796 TRY/sq.m, Bursa – 26.085 TRY/sq.m, Antalya – 37,757 TRY/sq.m, Konya – 24,252 TRY/sq.m.

Below are summary tables with the average price per square meter and the price change in relation to Q1 2024 and Q2 2023 in the six largest provinces of Turkey.

The average price per square meter in Turkish lira

The average price per square meter in US dollars

Due to the high level of inflation, housing prices in national currency increased in all 6 provinces. In turn, housing prices in dollar terms decreased in 5 out of 6 provinces over the year, which indicates that real prices for residential real estate are declining.

Below is a map that shows the average price per square meter of residential real estate, depending on the province. 

Foreign buyers

From January to July 2024, 12,929 purchase and sale transactions with residential real estate were carried out with the participation of foreigners – this is 2% of the total number of transactions during this period. If we compare with similar periods of previous years, we can say that in 2024 the demand from foreigners decreased. So, in January-July 2023, 22,076 transactions involving foreigners were made (3.3% of the total), and in January-July 2022 — 39,322 transactions (4.8%).

* – January-July 2024

The peak of activity of foreign buyers in the Turkish housing market occurred in 2022: then 67,490 purchase and sale transactions were made with the participation of foreigners – this is 4.5% of the total number of transactions.

Analyzing the data of the Statistical Institute of Turkey on housing sales to foreign citizens, we can say that in January-July 2024, citizens of Russia, Iran, Ukraine, and Germany most often bought residential real estate. 

It is worth noting that Russian citizens have been the leaders in buying housing since 2022 — before that, for a long period, the leaders in buying housing were citizens of Iraq and Iran.

In January-July 2024, foreign citizens most often bought housing in the provinces of Antalya, Istanbul, Mersin, Ankara, Yalova. Antalya and Istanbul provinces are traditionally the most popular areas for foreigners to buy a home.

Results

As January-July 2024 showed, there is still low activity on the part of buyers in the Turkish market. The reasons for the low activity are the continuing high inflation rate, high interest rates on loans, the general economic situation in the country – all this reduces interest in the Turkish market and forces us to take a wait–and-see position. 

However, it is worth noting that against the background of high inflation in the country and rising prices in the national currency, real property prices are showing a decrease. In general, buying residential real estate in Turkey can be a good investment, as Turkey is still a popular tourist country, as well as a state that has great potential for investors with assets in stable currencies.

Author

Roman Tomashevich Analyst

I show the situation on the real estate market in graphs and figures.

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