Turkish Real Estate Market Overview: A 2023-2024 Analysis

Overview of the 2023 Turkish Housing Market

The Turkish real estate market underwent a period of significant correction in 2023. Total residential property sales reached 1,225,926 units, representing a 17.5% decrease compared to the record-breaking activity of 2022. This shift reflects a broader transition in the Turkish economy, characterized by tightening monetary policy and rising living costs. Despite the overall decline, the market remains one of the most active in the region, driven by domestic urban transformation and sustained, albeit lower, international interest.

Regional Performance: Istanbul, Ankara, and Izmir

Istanbul maintained its status as the powerhouse of Turkish real estate. In 2023, the city accounted for 198,739 sales, or 16.2% of the national total. Ankara followed with 114,432 sales (9.3%), while Izmir recorded 65,465 sales (5.3%).

At the other end of the spectrum, eastern provinces like Ardahan and Hakkari saw the lowest transaction volumes. The concentration of sales in the "big three" cities highlights the ongoing demand for urban infrastructure, employment opportunities, and long-term capital appreciation in Turkey's primary economic hubs.

The Mortgage Crisis: High Interest Rates and Credit Access

The most dramatic change in 2023 was the collapse of mortgage-backed sales. As the Central Bank of the Republic of Turkey raised policy interest rates to 45% to combat inflation, the cost of borrowing became prohibitive for the average buyer.

Mortgage Sales Data

Mortgage-financed purchases plummeted by 36.6% over the year, totaling only 177,748 units. The situation worsened toward the end of the year; December 2023 saw a staggering 72.3% year-on-year drop in mortgage sales. Currently, the market is dominated by cash buyers, with mortgages accounting for a small fraction of total transactions. This environment favors institutional investors and high-net-worth individuals over middle-income families.

Non-Mortgage Transactions: Cash is King

With credit largely inaccessible, 1,048,178 properties were sold through direct payments or private financing arrangements in 2023. While this segment also saw a 13% decrease, it proves that the market still possesses significant liquidity. Many buyers are opting for installment plans offered directly by developers rather than traditional bank loans.

International Investment and Foreign Buyer Trends

Foreign property investment saw a sharp decline in 2023. Total sales to international buyers reached 35,005 units, a 48.1% decrease from the previous year. Several factors influenced this, including the increase in the minimum investment threshold for citizenship (raised to $400,000) and stricter residency permit regulations.

Top Nationalities Buying in Turkey

• Russia: Remained the top buyer group, seeking both lifestyle changes and safe-haven investments.
• Iran and Iraq: Continued to show strong interest, primarily in Istanbul and Ankara.
• Popular Destinations: Istanbul led foreign sales with 11,229 units, followed closely by the tourism hub of Antalya (12,702 units) and Mersin.

First-Time vs. Second-Hand Sales

The market for new builds (first-time sales) contracted by 17.5% in 2023, totaling 379,542 units. Second-hand sales, which make up the bulk of the market, fell by 17.5% to 846,384 units. The high cost of new construction, driven by rising material prices and labor costs, has kept the prices of new apartments high, pushing many buyers toward the secondary market where there is more room for price negotiation.

Gender and Ownership Demographics

Property ownership in Turkey shows a clear gender distribution. In 2023, men purchased 690,438 houses (56.3%), while women purchased 401,933 houses (32.8%). Approximately 1.6% of sales were joint purchases between men and women. The steady share of female ownership reflects the growing role of women in the Turkish economy and their increasing influence as primary decision-makers in real estate.

Economic Drivers and 2024 Market Outlook

The 2023 downturn was not a result of low demand, but rather a result of economic barriers. High inflation and the rising cost of construction materials have kept property prices high in nominal terms. However, as of early 2024, real price growth has begun to slow down.

Experts suggest that the market is currently in a "buyer's window." Sellers are becoming more flexible with prices due to the lack of credit-backed buyers. If inflation stabilizes and the central bank eventually begins to ease interest rates, a significant surge in pent-up demand is expected in late 2024 or early 2025. For now, the market remains a playground for cash-rich investors looking for long-term value in a high-inflation environment.

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