Turkey

Turkey Residential Real Estate Market Analysis 2025

Lalaine C. Delmendo

Türkiye's house prices appear to be continuously rising strongly, but this growth is merely an illusion, as real values are declining due to persistent hyperinflation in the country.

Table of Contents

Housing Market Snapshot

Overall inflation, while already decelerating, remains very high by historical and international standards. In February 2025, nationwide inflation was 39.05%, down from 42.12% in the previous month and 67.07% a year earlier, primarily due to easing price pressures for clothing and healthcare, according to figures from TurkStat. It was the lowest level since June 2023. Inflation reached a record high of a whopping 75.45% in May 2024.

As such, Turkey's nationwide residential property price index rose by a whopping 31.95% in January 2025 from a year earlier, according to the Central Bank of the Republic of Türkiye (CBRT), following y-o-y increases of 29.43% in 2024, 83.14% in 2023, 151.88% in 2022, 63.52% in 2021, 32.06% in 2020, and 9.83% in 2019.

However, there is a huge difference between the nominal and real figures. When adjusted for inflation, nationwide house prices actually fell by 7.16% y-o-y in January 2025.

Turkey's house price annual change

In Turkey's major cities:

  • In Istanbul, Turkey's largest city, the average house price soared by 29.6% in January 2025 from the same period last year. But when adjusted for inflation, house prices were down by 8.8% y-o-y.
  • In Ankara, the country's capital, house prices skyrocketed by 36.6% y-o-y in January 2025, but when adjusted for inflation, house prices actually dropped by a modest 3.9%.
  • In Izmir, the country's third-largest city, house prices were up by 29.6% y-o-y in January 2025. Yet house prices actually declined by 8.8% in real terms.

Istanbul had the most expensive housing in the country, with an average house price of TRY55,503 (US$1,520) per sqm during 2024, based on figures from the central bank. Izmir had an average house price of TRY40,595 (US$1,112) per sqm, while Ankara had TRY29,764 (US$815) per sqm.

Nationally, the average house price stood at TRY 36,061 (US$988) per sqm.

Turkey Annual House Price Change Graph

Demand for residential properties in Turkey is now dramatically improving, with the total number of home sales soaring by 20.6% to 1.48 million units in 2024 as compared to a year earlier, in contrast to y-o-y declines of 17.5% in 2023, 0.4% in 2022 and 0.5% in 2021, according to the TurkStat. The improvement in demand continues this year. In January 2025, home sales were up by a huge 39.7% y-o-y to 112,173 units.

Yet, foreign demand is plunging amidst the introduction of increased investment thresholds for residency and citizenship implemented in 2022. During 2024, foreign home purchases in Turkey plunged to 23,781 units, down by wa hopping 32.1% as compared to 35,005 units in 2023 and by a huge 64.8% as compared to 67,490 units two years ago, based on figures released by TurkStat. This follows a y-o-y decline of 48.1% in 2023.

As a result, foreign homebuyers' share of the market fell to just 1.6% in 2024, down from 2.9% in 2023 and 4.6% in the prior year.

In January 2025, foreign home purchases in the country fell further by 24.9% y-o-y to just 1,547 units, indicating that property demand from foreigners remains depressed.

Türkiye's economy continues to grow, albeit at a slower pace. During 2024, the overall economy grew by a modest 3.2%, a slowdown from annual expansions of 5.1% in 2023, 5.5% in 2022, and 11.4% in 2021, based on figures from TurkStat. The World Bank expects the Turkish economy to slow further, projecting a real GDP growth rate of 2.6% this year - at par with the International Monetary Fund's forecast.

Turkey Housing Unit Prices Graph

House Price Variations

Price variations in primary and secondary markets

In January 2025, new dwelling prices in Turkey surged by 33.9% compared to the same period last year, following annual increases of 33.9% in 2024, 91.3% in 2023, 140.8% in 2022, 70.5% in 2021, and 33.1% in 2020. However, in real terms, new dwelling prices fell by 5.8% y-o-y over the same period.

The same pattern is observed in the secondary market. In January 2025, nationwide existing dwelling prices increased by 31.7% y-o-y after registering an annual growth of 31.7% in 2024, 81.6% in 2023, 154.2% in 2022, 59.8% in 2021, and 31.6% in 2020. However, in real terms, prices were still down by 7.4%.

Turkey New and Existing Dwelling Price Indices Graph

Demand Highlights

Demand rising again

Residential property demand is now increasing again in Turkey, with the total number of home sales soaring by 20.6% to 1.48 million units in 2024 as compared to a year earlier, in contrast to y-o-y declines of 17.5% in 2023, 0.4% in 2022 and 0.5% in 2021, according to the TurkStat.

Turkey House Sales Graph

Over the same period, sales of new houses rose strongly by 27.6% y-o-y to 484,461 units, while second-hand house sales also increased by 17.4% to 993,564 units.

There are wide regional variations, but demand is now increasing by double-digit figures in most of Turkey's major cities in 2024:

  • In Istanbul, which has more than a 16% share of transactions, home sales rose sharply by 20.4% y-o-y to 239,213 units.
  • In Ankara, which accounted for a market share of 9.1%, the number of home sales increased by 17.1% y-o-y to 134,046 units.
  • In Izmir, which represented more than 5% of the market, home sales increased sharply by 22.8% y-o-y to 80,398 units.
  • In Antalya, which also captured more than 5% market share, the number of home sales was up by a huge 19.8% y-o-y to 77,512 units last year.
  • In Bursa, which took 3.6% of the market, home sales rose by 17.5% y-o-y to 53,362 units last year.
  • In Mersin, which accounted for more than 3% of the market, home sales surged by 34.6% y-o-y to 47,090 units.

The improvement in demand continues this year. In January 2025, home sales were up by a huge 39.7% y-o-y to 112,173 units, based on TurkStat figures. Over the same period, sales of new houses increased by 29.8% y-o-y to 32,785 units, while second-hand house sales surged by 44.2% to 79,388 units.

Turkey Home Sales by Type Graph

Foreign homebuyers continues to plummet

In 2024, foreign home purchases in Turkey plunged to 23,781 units, down by a whopping 32.1% as compared to 35,005 units in 2023 and by a huge 64.8% as compared to 67,490 units two years ago, based on figures released by TurkStat. This follows a y-o-y decline of 48.1% in 2023 and annual increases of 15.2% in 2022 and 43.5% in 2021.

As a result, foreign homebuyers' share of the market fell to just 1.6% in 2024, down from 2.9% in 2023 and 4.6% in the prior year. The declining number of foreign homebuyers in the past two years is primarily attributed to the increased investment thresholds for residency and citizenship implemented in 2022.

Turkey House Sales to Foreigners Graph

During 2024, the Russians led the foreign home purchases in Turkey, representing more than 20% share. The Iranians were a distant second, with a market share of 9%. They were followed by the Ukrainians with a market share of 6.8%, Germans with a 5.4% share, Iraqis also with a 5.4% share, and Kazakhstanis with 4.4% share.

With the surge in Russian homebuyers, Turkish banks began to open ruble accounts.

Most foreign buyers bought dwellings in Istanbul, accounting for about 35.4% of total sales in 2024, followed by Antalya (34.6%), Mersin (8.9%), Ankara (2.7%), Yalova (2.5%) and Bursa (2.2%).

Turkey House Sales to Foreigners by Province Graph

Then, in January 2025, foreign home purchases in the country fell further by 24.9% y-o-y to just 1,547 units, indicating that property demand from foreigners remains depressed.

Prior to this, property sales to foreigners have been generally rising in Turkey, except for the years 2016 and 2020 due to the Covid-19 pandemic. Foreign buyers had been buying large amounts of Turkish property, mirroring a substantial increase in Gulf tourism. As the Lira has fallen, visitors have been attracted to Turkey. Istanbul is now so full of Arab visitors that it resembles a Gulf city, with Arabic spoken in shops and restaurants catering to Gulf tastes.

Between 2013 and 2022, foreign home purchases more than quadrupled from 12,181 units to about 67,490 units. Russians, Iranians, and Iraqis accounted for almost one-third of the total foreign purchases during the period. They regard Turkey as a safe haven, and they feel culturally close to the country.

Foreign homeownership rules eased

It was only in 2002 that the Turkish property market was first opened to foreign buyers. But they were only allowed to purchase properties in a few zones and under the "reciprocity clause". This means that only nationals of countries allowing Turkish citizens reciprocal rights - like Britain, Germany, and the Netherlands - were allowed to buy properties. In 2005, the zones were abolished, but reciprocity remained.

The reciprocity requirement was finally abolished in August 2012, and since then, nationals from 183 countries have been allowed to buy properties in Turkey. Nationals of China, Russia, India, and Gulf Arab states, previously banned because of the reciprocity rules, are now allowed. The size of land foreigners can buy without special permission was increased to 33 hectares, up from 2.5 hectares.

Tens of thousands of foreigners have successfully acquired properties in Turkey, most notably in the Marmara and Mediterranean regions, Turkey's major finance and tourist hubs.

"The regulation easing requirements for foreigners to acquire Turkish citizenship, the volatility in the Turkish lira against other currencies, and the VAT exemption for foreigners helped spur the sales," said Melih Tavukçuoğlu, head of Istanbul's Asian-side Contractors' Association.

Turkey has granted citizenship to foreigners through various means since January 2017, which includes purchasing property worth at least US$1 million. During the same year, the government introduced other measures to entice foreign homebuyers:

  • Reduction of Land Registry's title deed fees from 2% to 1.5%, which are payable by both the buyer and the seller (or around 3% in total).
  • VAT exemptions for property owners who buy a Turkish property but do not live in Turkey, on the condition that they pay for the property with foreign currency. Homebuyers must also hold the property for 12 months after purchase.
  • The stamp duty for "promise to sell agreements" was reduced to 0% from 0.95%.

New regulations were introduced in September 2018, cutting the investment amount required for Turkish citizenship:

  • Purchasing real estate worth at least US$250,000 now gives you citizenship.
  • Or a fixed capital investment of US$500,000
  • Or keeping at least US$500,000 in a Turkish bank account for a minimum of three years, down from the earlier cap of US$3 million;
  • Or generating 50 jobs, down from 100 jobs.

However, effective June 13, 2022, the minimum threshold to obtain citizenship through real estate investment was raised from US$250,000 to US$400,000. This was amidst the surge in foreign interest in buying a home in Turkey during 2021-22.

To obtain residency in the country through real estate, foreign buyers need to invest a minimum of US$50,000. The amount increases to US$75,000 for purchases in metropolitan cities like Istanbul, Ankara, Izmir, Mugla, and Antalya. Effective October 16, 2023, the minimum investment to become a resident was raised to US$200,000 across all cities in Turkey.

The luxury housing tax came into effect

The luxury housing tax and other tax measures entered into force in January 2021. It is imposed on residences with a value of over TRY 5.25 million (US$143,790).

The following shows the revised tax rates:

  • Residential properties valued below TRY 5.25 million (US$143,790) are tax-exempt.
  • Residential properties valued between TRY 5.25 million (US$143,790) and TRY 7.87 million (US$215,550) are taxed 0.3% of the amount over the base level.
  • For properties worth up to TRY 10.5 million (US$287,582), an extra tax rate of 0.6% is levied for the amount over TRY 7.87 million (US$215,550).
  • Houses with a value of more than TRY 10.5 million (US$287,582) are taxed TRY 22,500 (US$616) plus 1.0% of the amount over the base level.

There are some exemptions. Those who own only one residence will not be subject to the said tax. Moreover, those who own more than one residence will not be subject to the luxury housing tax on whichever residence has the lowest value.

This higher tax on luxury housing and increased investment thresholds for residency and citizenship have thwarted property demand in recent years. In 2025, these policies are expected to continue to stabilize the market and reduce speculative activities.

Supply Highlights

Residential construction activity falling

Surprisingly, residential construction activity is noticeably slowing despite improving demand. In 2024, the total number of dwelling units in residential buildings granted construction permits in Turkey fell by 11.9% to 758,189 units compared to the prior year, according to figures from TurkStat. This is in contrast to an annual growth of 22.4% in 2023.

Other construction indicators showed a similar pattern. In 2024, the total number of buildings granted construction permits declined by 12.2% y-o-y to 122,594, while the total floor area also dropped by 12.4% y-o-y to 147.58 million square meters.

By building type, in 2024:

  • One-dwelling residential buildings: 45,594 dwelling units, down by 18.6% from the previous year.
  • Two- or more dwelling buildings: 170,616 dwelling units, down by 11.2% from a year ago.

From 2010 to 2017, the total number of dwellings granted construction permits averaged 940,000 units annually and peaked at more than 1.4 million units in 2017. It declined to about 670,000 units in 2018 and plunged to less than 320,000 units in 2019 - the lowest level since 2003.

Dwelling permits remained low during the onset of the Covid-19 pandemic, at just around 555,000 units.

Then, from 2021 to 2024, dwelling permits stabilized at an average of 762,000 units annually.

Turkey Number of Dwelling Units in Residential Buildings Granted with Construction Permits Graph

Rental Market

Good gross rental yields

Turkey's rental yields are good, with a nationwide average gross rental yield of 7.41% in Q1 2025, up from 7.14% in Q1 2024, according to recent Global Property Guide research.

In Istanbul, the gross rental yields on apartments - the return earned on the purchase price of a rental property, before taxation, vacancy costs, and other costs - range from 4% to 11.7% in Q1 2025, with a city average of 7.3%. This is higher as compared to the city average of 6.6% in the previous year and less than 6% in the past two years.

In other major cities:

  • In Ankara, gross rental yields fell between 5.4% and 9.5% in Q1 2025, with a city average of 8.29%.
  • Antalya produces relatively lower rental yields, between 3.46% and 8.17%, with a city average of 5.73%.
  • Izmir's rental yields range from 5.55% to 9.94%, with a city average of 7.1%.
  • In Adana, gross rental yields are high, ranging between 6.55% and 12.49%, with a city average of 8.95%.
  • In Konya, gross rental yields range from 6.23% to 10.54%, with a city average of 7.77%.
  • In Bursa, rental yields range from 6.74% to 8.33%, with a city average of 7.42%.
  • Kayseri rental yields are between 6.23% and 7.22%, with a city average of 6.74%.

Round-trip transaction costs are reasonable in Turkey.

Mortgage Market

Housing loans increasing rapidly, but residential mortgage market remains underdeveloped

The total value of housing loans in the country continues to increase substantially yet the size of the mortgage market relative to GDP continues to shrink.

Turkey's mortgage loan interest rates:

In January 2025, the total value of outstanding housing loans soared by 19.8% to TRY 522.94 billion (US$14.32 billion), following annual expansions of 16.8% in 2024, 33% in 2023, 20.6% in 2022, 7.9% in 2021, and 36.4% in 2020, based on figures from the Central Bank of the Republic of Turkey (CBRT).

By type of financial institution (as of January 2025):

  • Deposit banks: total housing loans outstanding were up strongly by 20.1% y-o-y to TRY 473.47 billion (US$12.97 billion), following annual growth of 17% in 2024 and 20.1% in 2023.
  • Participation banks: housing loans outstanding were up by 17.4% y-o-y to TRY49.47 billion (US$1.35 billion), after increasing by 15.3% in 2024 and 38.4% in 2023.
  • Development and investment banks: housing loans outstanding fell sharply by 26% y-o-y to TRY4.76 million (US$130,450), following a contraction of 25.4% in 2024 and a huge growth of 332.3% in 2023.

Over the past eighteen years, housing loans in Turkey have grown by an annual average growth of about 23% from 2005 to 2024. Despite this, the size of the mortgage market relative to the GDP has shrunk to just 1.2% in 2024 from 5.8% in 2016 - an indication that, on average, the economy is still growing faster than the residential mortgage market.

Turkey Housing Loans Graph

Historic Perspective

A brief history of Turkey's currency and debt crisis

The global crisis of 2008 caused house prices in Turkey to fall 14.65% (after inflation), then by 2.82% in 2009, by 3.54% in 2010, and by 2.39% in 2011. The market then surged between 2012 and 2016, largely due to the rising middle class gaining access to mortgage finance for the first time.

House price rises started to slow after the 2016 coup attempt due to economic and political turmoil, including terrorist attacks and political uncertainty. Istanbul's prime market particularly suffered in 2016, mostly due to the sharp depreciation of the Turkish Lira. The slower pace of house price rises continued in 2017 and 2018.

However, President Recep Tayyip Erdogan, in response to multiple crises, continually expanded the Turkish economy. He needed to generate a feel-good atmosphere to change the constitution in 2017 and to win the presidential election in 2018. But putting his foot on the economic accelerator caused problems - an overheated economy, high inflation, a current account deficit, a debt build-up, and a currency decline - which have recently required tough measures from the central bank. High interest rates and economic restraint have had an impact on the economy, which they always do, and one result has been a decline in real estate prices.

President Erdogan has long held eccentric views on monetary policy, believing that inflation is caused by high interest rates, which he has dubbed the "mother and father of all evil". His views cowed the monetary authorities, and the result has been inflation, pushing the lira down.

Turkey Interest Rates on Housing Loans Graph

This is ironic because Erdogan's period in office began with a conspicuous display of fiscal orthodoxy, causing housing loan rates to decline sharply from an average of 48.43% in 2002 to just 9.7% in 2013 - one of the great successes of Turkey's AKP government. However, as inflation took off, housing loan interest rates started to rise again to double digits, and by December 2018, the average interest rate was 27.82%.

After falling to a record low of 9.11% in July 2020 as the government facilitated access to credit to stimulate the economy amidst the Covid-19 pandemic, housing loan interest rates have risen sharply again, reaching 20% in December 2022, despite several rate cuts by the central bank amidst surging inflation. Interest rates for housing loans surged further to a whopping 42.1% in December 2023 and remained high at 41.1% in December 2024.

Inflation averaged 15% annually from 2017 to 2021 before surging to an annual average of 62.4% from 2022 to 2024.

Rising inflation has sapped the currency, but the lira's sharp nosedive in September 2018 was partly attributable to Turkey's worsened relationship with the US, which raised import tariffs on Turkish steel by 50% and on aluminum by 20% in protest at the detention of American pastor Andrew Brunson, who faced charges in relation to the failed coup attempt in 2016. Brunson was released after two years of detention.

The current account deficit widened from US$33.1 billion in 2016 to US$47.5 billion in 2017, a surge of almost 44%, according to the CBRT. The Turkish Lira plunged to TRY 6.3 per USD 1 in September 2018 from TRY 3.48 per USD 1 the previous year - an almost 45% drop. The lira has remained weak since.

Turkey has now amassed a large amount of foreign currency debt due to years of current account deficits but does not have sufficient reserves to support its liabilities.

The current account balance recorded a surplus of US$1.67 billion in 2019, its first and highest surplus since 2001, largely due to the lira's decline. However, the current account balance returned to a deficit in recent years as the COVID-19 pandemic hit. Turkey ran a current account shortfall of US$36.7 billion in 2020 and US$14.88 billion in 2021. Then, in 2022, the deficit climbed further to US$49.1 billion. In 2023, Turkey's current account deficit narrowed slightly to US$45.2 billion. In 2024, the country's current account gap declined further to US$9.97 billion, mainly driven by interest rate hikes and gold trade restrictions.

The country's budget deficit has been ballooning recently. During 2023, the country's budget deficit widened by nearly 900% to TRY1.4 trillion (US$38.3 billion) from TRY142.7 billion (US$3.9 billion) in the prior year, amidst a presidential election and two ravaging earthquakes, according to the Treasury and Finance Ministry.

In 2024, the budget deficit escalated to an unprecedented TRY 2.1 trillion (US$59 billion), fueled by soaring inflation, increases in spending due to election-related expenditures, and recovery efforts following a catastrophic earthquake.

In recent years, the Turkish lira lost about 69% of its value, from just TRY 5.85 per USD 1 in December 2019 to TRY 18.66 per USD 1 in December 2022, as the central bank continued its unorthodox rate-cutting policy against a backdrop of soaring prices and trade imbalances. Despite soaring inflation, the central bank slashed its key interest rate by 1,000 basis points from September 2021 to February 2023, as demanded by President Erdogan, to buoy economic growth.

However, with persistently high inflation, the central bank started to reverse gear and aggressively raise its key interest rates. In March 2024, the central bank raised its benchmark one-week repo rate by 100 basis points to 50%, its ninth consecutive rate hike in recent months and the highest level since April 2002. The benchmark interest rate has been raised by a cumulative 4,150 basis points, from 8.5% in June 2023 to 50% in March 2024, where it remained unchanged until December 25, 2024.

Despite this, the Turkish lira lost another 46.3% of its value against the US dollar in just two years, reaching a monthly average exchange rate of TRY 34.97 = USD 1 in December 2024.

In an effort to boost economic activity as inflationary pressures ease, the central bank adjusted its monetary policy, lowering the benchmark interest rate to 47.5% by December 2024. This was followed by a 250 basis point cut to 45% in January 2025 and another 250 basis point reduction to 42.5% in February 2025.

The Turkish lira depreciated by 3.4% against the US dollar over two months, reaching a monthly exchange rate of TRY 36.202 = USD 1 in February 2025.

Turkey Monthly Average Exchange Rates Graph

Socio-Economic Context:

Turkish economy continues to grow, albeit at a slower pace

Türkiye's economy grew by a modest 3.2% during 2024, a slowdown from annual expansions of 5.1% in 2023, 5.5% in 2022, and 11.4% in 2021, based on figures from TurkStat.

By economic activity:

  • Household consumption grew by 3.7% in 2024, down from a 13.5% growth in 2023.
  • Government spending was up by a meager 0.8% last year compared to a 2.5% increase in 2023.
  • Fixed investments expanded by 3.9% in 2024, a slowdown from a growth of 8.4% in the prior year.
  • Net trade supported growth, with exports increasing slightly by 0.9% in 2024 as compared to a decline of 2.8% in 2023. On the other hand, imports fell by 4.1% last year, following an increase of 11.8% in 2023.

"In Türkiye, growth softened to an estimated 3.2 percent in 2024, as private demand moderated amid a monetary policy tightening cycle that began in mid-2023. The economy fell into recession in the third quarter as activity was slower than expected," said the World Bank.

The World Bank expects the Turkish economy to slow further, projecting a real GDP growth rate of 2.6% this year - at par with the International Monetary Fund's forecast.

Türkiye's economy experienced strong growth from 2010 to 2018, averaging 6.4% annually. However, this momentum slowed significantly, with growth dipping to just 0.8% in 2019 and remained low at 1.9% during the pandemic year of 2020.

The seasonally adjusted unemployment rate stood at 8.4% in January 2025, down from 8.5% in the previous month and 9% in the same period last year, according to TurkStat. It marked the lowest jobless rate since November 2012, as the number of unemployed in the country fell to about 3 million people. The jobless rate was 6.5% for men and 12.1% for women. Overall, unemployment averaged 10.5% from 2010 to 2024.

Turkey GDP Growth and Unemployment Percentage Graph

Overall inflation, while already decelerating, remains very high by historical and international standards. In February 2025, nationwide inflation was 39.05%, down from 42.12% in the previous month and 67.07% a year earlier, primarily due to easing price pressures for clothing and healthcare, according to figures from TurkStat. It was the lowest level since June 2023. Inflation reached a record high of a whopping 75.45% in May 2024.

Inflation averaged 10.1% from 2004 to 2021 before skyrocketing to 72.3% in 2022. Inflation remained extraordinarily elevated, at an average of 53.9% in 2023 and 60.9% in 2024.

Turkey Inflation Percentage Graph

Sources:

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