Housing Market Loses Momentum as Real Prices Stall

Türkiye’s housing market is closing the year on a noticeably calmer note after an initially strong start fueled by interest rate cuts. Recent data on housing prices and sales point to a sector that has lost momentum, with real prices effectively flat and sales declining toward the final quarter of the year. While expectations remain cautiously optimistic, much of the sector’s hope is now firmly pinned on 2026.

Real Housing Prices Hold Steady Despite Nominal Gains

According to the Central Bank of the Republic of Türkiye’s Housing Price Index, housing prices continued to rise in nominal terms but showed almost no real growth. As of the end of November, the index increased by 2.67 percent compared to the previous month and by 31.04 percent year-on-year in nominal terms. Adjusted for inflation, however, real prices rose by just 0.3 percent, meaning that housing values have effectively remained at the same real level as a year ago.

In other words, housing prices across Türkiye have preserved their real value rather than delivering real gains. This trend reflects the combined impact of easing inflation pressures and still-elevated nominal price levels.

On a city-by-city basis, annual nominal price increases reached 31.7 percent in Istanbul, 37.9 percent in Ankara, and 31.6 percent in Izmir. Regionally, the most substantial yearly increases, at 40.1 percent, were recorded in provinces including Bingöl, Elazığ, Malatya, Tunceli, Van, Bitlis, Hakkâri, and Muş. The weakest growth, at 21.9 percent, was observed in Hatay, Kahramanmaraş, and Osmaniye.

Sales Decline Sharply Toward Year-End

While prices remained high in nominal terms, housing sales showed clear signs of fatigue. Nationwide housing sales fell by 7.8 percent year-on-year in November, dropping to 141,100 units. Istanbul led sales volumes with 24,234 transactions, followed by Ankara with 12,706 and Izmir with 8,540. At the other end of the spectrum, Ardahan, Bayburt, and Artvin recorded the lowest sales figures.

Mortgage-backed sales also declined, falling 1.4 percent year-on-year in November to 21,499 units. Mortgage transactions accounted for 15.2 percent of total sales, with 5,483 of these involving newly built homes. Other types of sales fell more sharply, decreasing by 8.8 percent to 119,601 units.

Despite the late-year slowdown, cumulative figures for the January–November period paint a more positive picture. Total housing sales rose 13.3 percent year-on-year to 1.43 million units. Mortgage-backed sales surged by 53.5 percent to 207,519 units, representing 14.5 percent of all transactions. Of these, nearly 50,000 involved first-hand sales. Other sales categories also increased by 8.5 percent over the same period.

Early Boost From Rate Cuts Could Not Be Sustained

The year began on a strong note following the Central Bank’s decision to initiate an interest rate cut cycle in December. In January, housing sales jumped by 39.7 percent year-on-year, driven mainly by a dramatic 182.8 percent increase in mortgage-backed transactions. As a result, the share of credit-financed purchases in total sales nearly doubled compared to the previous year.

This momentum continued into February, with mortgage-backed sales rising by 90.1 percent and overall sales up by 20.1 percent. However, uncertainty surrounding monetary policy and increasing political tensions began to weigh on the market in March, when annual sales growth slowed sharply to 5.1 percent.

April brought a temporary rebound, primarily due to base effects from exceptionally low sales a year earlier, pushing annual growth to 56.6 percent. Yet as domestic and global uncertainty persisted, sales growth steadily lost steam. By October, yearly sales growth turned negative at minus 0.5 percent, followed by a deeper contraction of 7.8 percent in November. This marked the second consecutive month of declining housing sales.

High Costs Continue to Weigh on Demand

Several structural factors continue to suppress demand. Despite interest rate cuts, mortgage rates remain high, particularly for middle-income households seeking homes for primary residence. At the same time, nominal housing prices are still elevated, even though real prices have stopped rising.

Uncertainty surrounding the gap between interest rates and inflation has also encouraged a “wait-and-see” approach among investors. In addition, a substantial shift toward gold as an alternative investment during 2025 has diverted savings away from real estate, further dampening speculative demand.

What to Expect in 2026

Looking ahead, the housing market enters 2026 under the shadow of unresolved challenges inherited from 2025. High nominal prices, weak real purchasing power, and still-costly mortgage financing remain key constraints. However, expectations for further interest rate cuts dominate market projections.

A widely held view is that housing loan rates could fall below 2 percent per month alongside continued policy easing. If that scenario materializes, demand is expected to rebound. Analysts suggest this renewed demand would likely come not from first-time buyers in lower-income brackets, but from upper-middle- and higher-income investors reacting to fears that prices may rise once borrowing costs fall.

Another potential driver is the so-called “wealth effect.” With gold prices having surged sharply in 2025 and signs of saturation emerging, investors holding precious metals may eventually shift toward housing purchases, adding new momentum to demand.

Any revival in demand is expected to push prices higher, though not uniformly. Regional divergence is forecast to intensify, with more substantial price increases in major metropolitan areas such as Istanbul, Ankara, and Izmir. In contrast, peripheral areas with lower-quality housing stock may continue to see weak sales activity. In Anatolian cities where prices rose sharply in 2023 and 2024, a fatigue effect could limit nominal price growth in 2026, except in university towns, industrial hubs, and cities experiencing inward migration.

Slowing rental growth is another significant trend. As rental yields decline, housing increasingly functions as a store of value rather than a cash-flow-generating investment. This dynamic is expected to curb speculative buying and reinforce cautious investor behavior.