The Turkish residential property market is experiencing a cooldown, marked by a 9.5% decrease in property sales in September compared to the previous year, as reported by the Turkish Statistical Institute (TurkStat). This decline is even more pronounced, showing a 16.4% drop from August. Mortgage purchases, constituting a significant portion of the market, saw a sharp 50% reduction from August and a 38% annual decrease. In contrast, cash transactions, representing the majority of purchases, experienced a relatively modest 11% year-over-year dip.
This shift follows a substantial surge in house prices, witnessing a remarkable 96% increase by the end of June, far exceeding the global average of 3-4%, according to data from residential property consultancy Knight Frank. Concurrently, Turkey’s central bank has undertaken a significant adjustment in its monetary policy, raising target rates from 8.5% in June to a robust 35% in October to combat persistent inflationary pressures.
Despite these challenges, the market demonstrates resilience, with asking prices remaining relatively stable in US dollar terms, even amidst the devaluation of the Turkish lira.
Online property search platform Housearch.com indicates that Turkey remains an attractive market for property investors, projecting an anticipated cumulative average annual growth rate of 8% leading up to 2027.
The annual decline in property sales to foreign buyers in 2023 is attributed to the “high base effect” of 2022, a year that saw a record 67,490 homes sold to foreigners, with a significant portion comprising Russians and Ukrainians seeking refuge from conflict.
Notably, recent military confrontations in the Middle East have not dissuaded investors. Turkey’s criticism of Israel has not dampened investor confidence, and the growing instability in the region could potentially drive increased demand, akin to the surge observed during the 2017-2018 conflict with ISIS. This period saw affluent migrants from the region relocating to Turkey, resulting in a doubling of annual property sales to foreign buyers.
