House sales in Türkiye in 2023 fell to the lowest level in the last nine years, official data showed Friday, as rising interest rates and inflation weighed, while the market activity is not expected to pick up until at least the last quarter of the year.
Home sales declined 17.5% from a year ago to 1.23 million, the Turkish Statistical Institute (TurkStat) said. The decrease is attributed to tightening conditions, elevated housing loan interest rates, and a shift toward alternative investment avenues offering higher returns.
Industry representatives suggest that the weak trend is likely to persist in the coming months due to tightening measures, with recovery expected toward the end of the year.
Türkiye's central bank delivered seven consecutive interest rate hikes after a new economy administration reversed yearslong easing policy after President Recep Tayyip Erdoğan's reelection in May.
The tightening drive since June took the central bank's benchmark policy rate from 8.5% to 42.5%, as authorities sought to tame inflation, which neared 65% last month.
The bank has signaled that the aggressive hikes could soon end, but it pledged to maintain tight monetary policy as long as needed.
Makbule Yönel Maya, the general manager of TSKB Real Estate Appraisal, noted a sharp fall in the last quarter of 2023, which she says eventually led house sales to the lowest level in the past nine years.
Maya attributed the decline to the Banking Regulation and Supervision Agency's (BDDK) restrictive regulations on housing loans for those purchasing a second home, coupled with the high interest rates hovering around 3.5% on mortgage loans.
She pointed out that the decline was also influenced by investment-oriented buyers turning to other instruments.
"Deposit interest rates have had the most significant impact on investment-driven housing purchases as they started to provide attractive returns," Maya said.
"The restriction of rent increase rates to 25% and the prolonged processes related to eviction cases also adversely affected investment-oriented buyers. Another contributing factor was the significant increase in housing prices."
Maya expressed expectations for a subdued housing market in 2024 as well.
"Considering the government's policies and tightening measures, we expect to see a calm market this year, with the best-case scenario being an uptick in activity in the last quarter," she noted.
Maya also foresaw a continued weak outlook for residential property sales to foreigners, which fell 48.1% year-over-year to 35,005 units in 2023, according to the TurkStat data. They accounted for 2.9% of the overall sales.
The fall is mainly attributed to the fact that the minimum investment amount required for foreigners to obtain citizenship through real estate purchases reached $400,000 during the year, from $250,000.
Russians topped the list of foreign buyers with 10,560 houses purchased last year, still reflecting how many have sought a financial haven in the wake of Moscow's invasion of Ukraine and Western sanctions.
Total sales dropped 33.4% in December compared to the previous year to 138,577 units, data showed, partly due to tightening in monetary policy and limited access to loans.
The data also showed mortgaged sales declined 72.3% in December from a year earlier, and 36.6% in 2023 as a whole, making up 14.5% of all sales in the year.
