The Turkish real estate landscape is experiencing a remarkable transformation as mortgage financing emerges as the driving force behind the country’s housing market expansion. With a 6.9% year-on-year growth in September reaching 150,657 units sold, Turkey’s property sector demonstrates resilience in the face of broader economic challenges. What makes this expansion particularly noteworthy is the dramatic 34.4% surge in mortgage-financed transactions, which now account for 14.1% of all home sales. This shift toward mortgage financing indicates a significant evolution in homeownership accessibility and suggests that financial institutions are successfully adapting their products to meet changing consumer needs. For prospective buyers, this trend signals that obtaining financing may be more achievable than in previous years, potentially opening doors to homeownership for a broader segment of the population.
The remarkable growth in mortgage-financed transactions to 21,266 units represents a pivotal moment in Turkey’s housing finance ecosystem. This substantial increase reflects not only improved lending conditions but also a fundamental change in consumer behavior and confidence. When mortgage activity outpaces overall market growth by a ratio of nearly five to one, it indicates that credit availability is becoming the primary catalyst for housing transactions. Financial institutions appear to have recalibrated their risk assessment frameworks, potentially recognizing the underlying stability of Turkey’s housing market despite broader economic fluctuations. For borrowers, this trend suggests that lenders are increasingly willing to extend credit, potentially with more favorable terms and requirements than in previous cycles.
The dichotomy between newly built homes and existing properties reveals interesting market dynamics that both buyers and investors should note. While newly constructed properties saw a respectable 5% increase in sales to 47,117 units, the existing home market demonstrated stronger momentum with a 7.8% rise to 103,540 units, capturing 69% of total transactions. This preference for existing homes may indicate practical considerations among buyers, such as immediate occupancy options, established neighborhood amenities, and potentially more competitive pricing compared to new construction developments. For market participants, this trend suggests that opportunities may be more abundant in the existing home segment, where inventory turnover is higher and pricing dynamics may offer better negotiation possibilities for discerning purchasers.
Istanbul’s continued dominance as Turkey’s premier real estate market, with 24,119 sales in September, underscores its enduring appeal as both a residential and investment destination. Following Istanbul, Ankara and İzmir maintain their positions as significant secondary markets with 13,417 and 8,544 sales respectively. This geographical distribution reveals a healthy balance between the nation’s primary economic engine and its important regional centers. For homebuyers and investors, this market hierarchy suggests that opportunities exist at multiple levels, from Istanbul’s dynamic urban environment to the more stable mid-sized markets of Ankara and İzmir. Each city offers distinct advantages: Istanbul for its international appeal and rental yields, Ankara for its government sector stability, and İzmir for its coastal lifestyle and growing commercial importance.
The decline in foreign property ownership, which fell 7.7% year-on-year to represent just 1.2% of total transactions, presents an interesting counterpoint to the domestic market’s expansion. Istanbul remains the preferred destination for foreign buyers with 744 units sold, followed by Antalya’s 557 and Mersin’s 124. The January-September period showed an even more pronounced 12.6% decline in foreign purchases to 14,944 units. This trend may reflect changing global economic conditions, currency fluctuations affecting purchasing power, or shifting investment priorities among international buyers. For domestic market participants, this reduced foreign competition may present opportunities for local buyers to negotiate more favorable terms, particularly in traditionally popular expatriate areas where inventory levels may be adjusting to lower demand from overseas purchasers.
The composition of foreign buyers reveals interesting geopolitical influences on Turkey’s real estate market. Russian citizens emerged as the top international purchasers in September with 267 homes, followed by Iranians with 202 and Iraqis with 146. This pattern suggests that regional economic relationships and diaspora connections significantly influence cross-border property investment. For market analysts and developers, these nationality preferences highlight the importance of understanding regional economic dynamics and tailoring marketing strategies to specific international buyer segments. The concentration of foreign purchases among national groups from neighboring countries indicates that Turkey continues to serve as a regional safe-haven for property investment, even as overall foreign participation moderates.
The nine-month cumulative data provides valuable perspective on the sustainability of Turkey’s housing market expansion. With total home sales increasing 13% to reach 966,234 units and mortgage-financed transactions surging an impressive 76% to 162,493, the market demonstrates strong underlying momentum. This extended timeframe helps distinguish between short-term fluctuations and longer-term trends, suggesting that the mortgage-fueled expansion represents a structural shift rather than a temporary phenomenon. For market observers, these cumulative figures indicate that Turkey’s housing sector is building momentum throughout 2023, with mortgage activity accelerating at a rate significantly outpacing overall market growth. This divergence suggests that credit availability is becoming increasingly important to market performance.
The Residential Property Price Index reported by the Central Bank reveals a complex inflationary picture that requires careful interpretation. While nominal prices rose 1.7% in September and 32.2% annually, the 0.8% decline in real terms indicates that housing appreciation has not fully kept pace with broader inflation. This nuanced finding suggests that while property values continue to increase in absolute terms, the purchasing power of those gains has been somewhat eroded by inflation. For homeowners and investors, this reality underscores the importance of focusing on long-term appreciation potential rather than short-term nominal gains. The disparity between nominal and real price growth also highlights the need for buyers to factor in inflation expectations when evaluating investment returns and mortgage affordability.
The 76% surge in mortgage-financed transactions over the first nine months of the year represents a fundamental shift in Turkey’s housing finance landscape. This dramatic acceleration suggests that lenders have successfully adapted their products to current market conditions while borrowers have increasingly embraced mortgage financing as a pathway to homeownership. The expansion of mortgage activity to represent approximately 16.8% of total sales in the nine-month period (162,493 of 966,234 units) indicates a significant deepening of the housing finance sector. For prospective buyers, this trend suggests that mortgage products may be becoming more accessible and affordable, potentially opening doors to homeownership for segments of the population previously excluded from credit markets.
The intersection of mortgage growth and price appreciation creates important considerations for both borrowers and lenders in Turkey’s evolving housing market. With mortgage activity surging 76% year-to-date while property prices increased 32.2% nominally, there’s a clear dynamic at play where increased credit availability is facilitating market participation and potentially fueling price appreciation. For borrowers, this environment requires careful assessment of long-term affordability, particularly given the inflation-adjusted price performance. For lenders, the challenge lies in maintaining prudent underwriting standards while expanding access to credit. The interplay between these factors suggests that Turkey’s housing market may be entering a phase where mortgage availability and property values reinforce each other’s growth trajectories.
The market segmentation between new and existing homes, combined with the mortgage financing trend, reveals strategic opportunities for different types of market participants. For first-time buyers or those with budget constraints, the existing home market’s strong performance (69% of total sales) may offer more immediate opportunities with potentially less competition from institutional investors that typically favor new developments. For investors, the mortgage finance surge suggests that rental properties may become increasingly viable given the growing pool of tenants who are accessing financing. For developers, the 5% increase in new home sales despite the mortgage boom indicates continued demand for modern housing, particularly if development strategies address affordability concerns and location advantages relative to existing inventory.
The Turkish housing market’s performance through September 2023 offers valuable lessons for homebuyers, investors, and industry professionals navigating evolving real estate finance landscapes. The intersection of expanding mortgage availability, moderate real price growth, and shifting market dynamics suggests a period of both opportunity and caution. For prospective buyers, the message is clear that mortgage financing is becoming more accessible, but careful attention to long-term affordability in an inflationary environment remains crucial. Investors should recognize the growing importance of mortgage accessibility to market liquidity and price formation. Industry participants would be wise to develop strategies that address the preferences of existing home buyers while preparing for potential shifts in mortgage products and underwriting standards. As Turkey’s housing market continues to evolve, those who understand the nuanced relationship between financing availability and property values will be best positioned to capitalize on emerging opportunities.
