Turkey’s Housing Market Pins Its Hopes on 2026 as Sales Slow and Real Prices Stall

After a strong start to 2025 fueled by interest rate cuts, Turkey’s housing market lost momentum toward year-end. While nominal home prices continue to rise, real prices have effectively stagnated over the past year, and nationwide sales fell sharply in October and November. High mortgage rates, weakened purchasing power, and economic uncertainty have pushed both owner-occupiers and investors into a wait-and-see mode. Expectations for a meaningful recovery are now largely deferred to 2026, contingent on deeper rate cuts and improved affordability.

Real house prices flat despite high nominal gains

According to the Central Bank of the Republic of Türkiye’s (CBRT) House Price Index, housing prices rose 31.04% year-on-year in nominal terms as of November. Adjusted for inflation, however, real price growth was just 0.3%, indicating that nationwide housing prices have merely preserved their real value over the past year.

On a monthly basis, the index increased by 2.67% in November. Annual nominal gains reached 31.7% in Istanbul, 37.9% in Ankara, and 31.6% in Izmir. Regionally, the strongest annual increases were recorded in parts of eastern Türkiye, while the weakest price growth was seen in the Hatay–Kahramanmaraş–Osmaniye region.

Home sales lose momentum in the final quarter

Nationwide home sales fell 7.8% year-on-year in November to 141,100 units, marking a clear slowdown toward the end of the year. Istanbul, Ankara, and Izmir accounted for the highest number of transactions, while Ardahan, Bayburt, and Artvin recorded the lowest sales volumes.

Mortgaged home sales declined 1.4% year-on-year to 21,499 units, accounting for 15.2% of total transactions. Of these, 5,483 were first-hand home purchases. Other sales categories posted a sharper 8.8% annual decline.

Despite the weak final quarter, cumulative sales for January–November remained strong. Total transactions rose 13.3% year-on-year to 1.43 million units, with mortgaged sales jumping 53.5%. Still, the data show that most of this growth was front-loaded in the first half of the year.

Early boost from rate cuts proved short-lived

The CBRT’s initial rate cuts sparked a sharp rebound in housing demand at the start of 2025. In January, total home sales surged nearly 40%, driven by a 182.8% jump in mortgaged transactions. February saw a similar pattern.

Momentum faded from March onward, however, as political uncertainty increased and doubts emerged over the pace and sustainability of further rate cuts. By summer, the slowdown became more pronounced, with sales turning negative on an annual basis in October. November marked the second consecutive month of contraction.

2026 outlook hinges on deeper rate cuts

As the market enters 2026, it remains constrained by high nominal prices, weak real incomes, and still-elevated mortgage rates. Market participants increasingly view interest rate policy as the key determinant for a revival next year.

Expectations center on mortgage rates falling below 2% per month, which could reignite demand. Analysts note that any initial rebound would likely be led not by first-time buyers, but by middle- and upper-income investors acting on fears that prices could rise rapidly once financing costs ease.

Another potential catalyst is a “wealth effect” from gold. After strong gains in gold prices during 2025, a perception that the rally has peaked could prompt some investors to rotate from precious metals into real estate.

Regional divergence set to widen

Looking ahead, regional divergence in housing prices is expected to intensify. Major metropolitan areas such as Istanbul, Ankara, and Izmir are likely to see stronger price increases if demand revives, while sales of lower-quality housing stock on city outskirts may remain subdued.

In parts of Anatolia where prices rose sharply in 2023–2024, analysts warn of “fatigue,” with nominal gains likely to be limited in 2026. By contrast, university towns, industrial hubs, and cities receiving sustained migration are expected to show greater resilience.

Meanwhile, slowing rent growth and declining rental yields are reducing the appeal of housing as a cash-flow-generating investment. As returns compress, speculative demand may remain restrained, reinforcing a cautious, wait-and-see approach across much of the market.

By Naki Bakir, DUNYA DAILY

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