Türkiye on Tuesday launched what is said to be the largest social housing project in the country’s history, in a bid to help many low-income households become homeowners, as well as to tackle soaring real estate prices and rents.

Some 240,000 housing units are planned to be built across Türkiye's 81 provinces in the first stage, President Recep Tayyip Erdoğan said, as part of the project that will offer properties at affordable interest rates, prices and payment plans.

These houses are aimed to be delivered in as soon as two years after the construction begins at the beginning of 2023, Erdoğan told an event to announce the project in the capital Ankara.

"This is the largest social housing project in Türkiye’s history," the president said. "This campaign represents the largest housing investment in the world in terms of its number and quality."

The government had pledged to act as residents struggle to find affordable homes to rent or buy, and soaring prices triggered alarm. Türkiye's residential property price index (RPPI) surged an annual 160% in June in nominal terms, according to official data.

In the country’s largest city Istanbul, home to around a fifth of Türkiye’s population of 85 million, the index climbed 185% on the year. The rise in Ankara was 165%, while prices in Izmir, the third largest city, rocketed 151% on an annual basis.

The project will expand and around 500,000 social housing units will have been built through 2028, Erdoğan said. Some 250,000 housing plots and 50,000 workplaces are also aimed to be developed in this time frame, he added.

"A project of this size means an investment of approximately TL 900 billion," Erdoğan said. "With the multiplier effect, the economic impact of this project is TL 2 trillion. Such an investment will reduce housing prices and rents and make it easier for citizens to own a house."

Of the units in the first stage, 50,000 will be allocated in Istanbul, 18,000 in Ankara, 12,000 in the Aegean province of Izmir and 10,000 in the southeastern province of Gaziantep.

Applications for the campaign, which Erdoğan said will prioritize pensioners, young people, newly married, veterans, relatives of martyrs and the disabled, begin on Wednesday and will last through the end of October.

There will be an income cap on eligibility for applying for buying a house from the social housing project. Households with an income below TL 18,000 in Istanbul and TL 16,000 in other provinces and those who are not currently homeowners will be able to apply.

The payments, which may be made in installments of up to 240 months, will be kept at a level that minimum wage earners can afford.

The Housing Development Administration (TOKI) will be in charge of the project. The developer has built some 1.17 million houses in the last 20 years.

Despite high borrowing costs and soaring prices, house sales in Türkiye have jumped 24.2% year-over-year from January through July this year, with around 820,300 houses exchanging hands, according to the Turkish Statistical Institute (TurkStat).

The rise came amid declining supply and high costs, with households viewing real estate as an attractive investment tool to shield themselves from inflation that runs at over 80%, fueled by soaring food and energy prices.

Sales fell 12.9% to 93,902 houses in July, marking the first annual drop since August 2021. Month-over-month, the figure was down 38% from 150,509 in June.

To tackle high prices, the government recently announced an upper limit on annual increases in home rentals. The new regulation caps the annual hikes in rents at 25%.

Rent, along with petrol vehicles and cigarettes, has the heaviest weighting in the official inflation basket.