Turkish housing market continues to grow despite foreign demand declines

Türkiye’s housing market maintained its upward trajectory in February, recording the eighth consecutive month of annual growth in home sales, while sales to foreign buyers declined by more than 20% year-over-year.

According to the Turkish Statistical Institute (TurkStat), a total of 112,818 housing units were sold across the country, representing a 20.1% increase compared to the same month in 2024.

This makes February 2024 the second-highest February in terms of housing transactions since records began, surpassed only by February 2020, when 118,753 units were sold before the onset of the COVID-19 pandemic.

Sharp decline in sales to foreign buyers

Despite this overall growth, the number of properties sold to foreign nationals declined significantly. In February, 1,457 homes were sold to foreign buyers—a 21.1% decrease compared to the same period last year.

Foreign sales accounted for just 1.3% of total housing transactions during the month, reflecting a downward trend in international demand for Turkish real estate. In the January–February period, total sales to foreign nationals fell by 23.1% year-on-year to 3,004 units.

Rising property prices in Türkiye—often increasing at a pace faster than the exchange rates of foreign currencies—have made real estate purchases more expensive for international buyers. At the same time, the weakening of local currencies in many buyers’ home countries has reduced their purchasing power abroad.

Russian citizens remained the leading foreign buyers, purchasing 256 housing units in February. They were followed by Iranian nationals with 133 units and Iraqi nationals with 99 units. These figures are consistent with recent trends showing continued interest from regional buyers, many of whom consider Türkiye a relatively stable destination for investment and residence.

Homebuyers turn to mortgage financing

Mortgage-financed housing sales rose sharply in February, as 16,778 homes were sold using mortgage loans, marking a 90.1% year-on-year increase. These transactions represented 14.9% of all housing sales that month, indicating a growing interest in property ownership through financing —influenced by expectations of long-term inflation and government-supported mortgage incentives.

In the January–February period, mortgaged home sales reached 33,504 units, an impressive 127.3% increase compared to the same period last year.

Of the February mortgage sales, 3,956 were first-hand transactions, meaning they were new homes sold directly by developers. For the two-month period, 7,812 of the mortgaged homes were also first-hand.

Housing price growth slows in Istanbul

While home prices in Türkiye continue to rise in nominal terms, growth has begun to slow—especially in major urban centers. According to TurkStat, the construction of new buildings expanded by 18.2% year-on-year in February. However, the monthly growth rate declined slightly, easing from 6.2% in January to 5.5% in February.

Construction cost inflation—a key factor in overall housing price trends—also showed signs of relief, as it declined to 26.61% in February, down from 34.47% in previous months.

According to the Central Bank of the Republic of Türkiye (CBRT), the Residential Property Price Index, which tracks changes in the prices of residential properties over time, rose by 2.8% month-on-month in February and by 31.3% year-on-year in nominal terms.

However, when adjusted for inflation, housing prices actually declined by 5.6% annually in real terms. This means that although the nominal value of properties is increasing, the purchasing power of those values is eroding due to the country’s high inflation environment.

Among Türkiye’s three largest cities, Ankara recorded the highest annual increase in housing prices at 37.2%, followed by Izmir at 32.7%. Istanbul, which remains Europe’s most populous city, posted a more modest increase of 28.4%.

Istanbul’s comparatively slower growth could reflect market saturation, affordability concerns, or a shift in demand toward secondary cities offering more favorable price-to-value ratios.

Sector representatives noted that although February sales showed improvement, the housing market has yet to reach a healthy balance. Experts stressed the need for lower interest rates and reduced land costs to support a full recovery, suggesting that while some improvement may begin in the second half of 2024, the market has not yet returned to its ideal equilibrium.

They also pointed out that the sharp rise in mortgage transactions—despite persistently high interest rates—reflects growing urgency among buyers, driven by concerns over further increases in home prices and rents. As a result, capital is continuing to shift from other financial instruments into real estate.

According to data from the Turkish real estate analytics platform Endeksa, residential rental prices in Türkiye increased by 40.54% over the past year, significantly outpacing the 26.35% rise in housing sale prices. This growing gap suggests that, from an investment perspective, purchasing property may currently offer more favorable returns than renting.