Residential property sales in Turkey rose nearly 40% year-over-year in April, official data showed Tuesday, as the upward trend continued despite high borrowing costs and soaring prices.
The surge was also propelled by the pace in interest from foreign buyers, particularly Russians, who more than doubled their house purchases compared to a month ago as they sought a financial haven.
House sales rose 38.8% in April to 133,058 units, up from 95,863 a year ago, the Turkish Statistical Institute (TurkStat) said, marking an all-time monthly high for the month.
It followed the highest March figure to date, as sales hit 134,170, a 20.6% year-over-year increase. Sales on annual basis had surged 113.7%, 25.1% and 20% in December, January and February, respectively.
The rise comes amid declining supply and soaring prices, but households continue to view real estate as an attractive investment tool to shield themselves from inflation that runs at a 20-year high of nearly 70%.
The government earlier this month announced several measures to boost home sales and address the skyrocketing prices that have surged nearly 100% annually, as residents struggle to find affordable homes to rent or buy.
The construction index has soared 102% year-over-year in March, according to data from TurkStat. The residential property price index also leaped an annual 96% in February, the central bank data showed. In Istanbul, the index climbed 106% on the year.
'Safe harbor'
The data showed April mortgaged sales rose 82.9% from a year earlier to 32,030, accounting for 24.1% of the total sales in the period.
"It seems that everyone wants to invest in 'safe harbor' real estate," said Ziya Yılmaz, chairperson of Dap Holding. "They are right about this, because neither foreign exchange nor gold made the investment as profitable as real estate," he added.
The surge in sales this year come despite interest rates on housing loans being above 1%, soaring costs and skyrocketing prices, Yılmaz said.
Istanbul, Turkey's largest city in terms of population, had the highest share with 19.8%, or 26,330 house sales last month. It was followed by the capital Ankara with 12,195 sales and the Aegean province of Izmir at 8,459, giving them shares of 9.2% and 6.4%, respectively.
Sales from January through April were up 26.2% to 453,121 houses, despite high borrowing costs.
New loan package
The growth momentum will continue because real estate is the most valuable means of protection against inflation, said Inanç Kabadayı, chairperson of Ege Yapı.
The current demand supports the expectations, Kabadayı told Anadolu Agency (AA), stating that measures recently unveiled by the government would add pace to sales in the period ahead.
As part of the scheme announced by President Recep Tayyip Erdoğan last week, cheaper housing loans will be provided to those who convert their foreign exchange savings to Turkish lira or sell their gold to the central bank to use in purchases of houses worth up to TL 2 million ($127,150).
The rates on the loans would be a monthly 0.89% with a maturity of up to 10 years.
Ankara has called on individuals and companies to convert their foreign exchange savings to lira to support the currency and unveiled a scheme in December to boost lira deposits by protecting them against exchange rate volatility.
Erdoğan said the measure on housing loans would support this effort, reversing a yearslong dollarization trend.
He said loans of up to TL 2 million with a monthly rate of 0.99% and a maturity of 10 years would be provided to first-time homeowners.
Loans with 36-month maturities will be provided to construction companies to complete some projects if they promise to keep sale prices unchanged for a year.
Erdogan said the loan package for construction companies aims to raise the housing supply, thereby bringing prices to balance.
Russians top list for first time
Sales to foreigners rose 58.1% year-over-year last month to 6,447 units, the TurkStat said. Russian citizens rose to the top of the list among nations in April for the first time ever, boosting their purchases by 186.6% year-over-year to 1,152 houses from 547 in March.
They were followed by Iranians with 905 and Iraqis with 714.
Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates (UAE), seeking a financial haven in the wake of Moscow’s invasion of Ukraine and stifling Western sanctions, many property companies say.
Many Ukrainians fleeing the war have flown to join their relatives residing in Turkey, while others opted for renting or real estate purchases.
They have revved up their purchases, buying some 263 houses in April, a nearly 186% increase from 92 a year ago.
"After the war, the interest of not only Russians but also Ukrainians increased," said Selman Özgün, chairperson of Helmann Yapı.
"We can clearly see this increase in Antalya," Özgün noted, referring to the Mediterranean resort city that has for years been a favorite holiday destination for both Russians and Ukrainians.
While Turkey and the UAE have criticized the Russian offensive, Ankara opposes non-U.N. sanctions on Russia and both countries have relatively good ties with Moscow and still operate direct flights.
Ankara is trying to balance its close ties with both Russia and Ukraine and has positioned itself as a neutral party trying to mediate to end the conflict.
"The safest country for Russians right now is Turkey. We hear it from them too," said Hakan Sabbağ, sales manager at Akzirve.
"Previously, they were buying in Antalya, now they have started investing in Istanbul and some other cities," Sabbağ noted.
"In fact, we have heard that some companies operating in Russia have told their staff that they can continue their work from Istanbul," he added.
Sabbağ noted the increase in interest by citizens from elsewhere as well, including Kazakhstan, South Korea and China. He stressed the expectations of even greater momentum in real estate in summer, which could be propelled particularly by demand from Saudi Arabia and other Gulf countries.
From January through April, house sales to foreign nationals reached 20,791 units, an increase of 48.9% compared to the same period of last year, the data showed.
Foreign home sales hit a record 58,576 units in 2021, a 43.5% year-over-year increase. The previous annual record was set in 2019 with 45,483 units.
Sales had accelerated as a depreciation in the lira made Turkish property more attractive to foreign buyers, with the authorities pursuing the new economic policy of low interest rates to boost credit, exports and investments, saying it would help the country weather inflation.
To support the drive, Turkey’s central bank had brought down the benchmark policy rate by 500 points since September to 14%.