Turkish house sales reverse long decline to grow nearly 17% in July

Housing sales in Türkiye rebounded in July after five consecutive back-to-back declines, according to official data that also showed purchases by foreigners maintained a downward trend.

Some 109,548 residential properties exchanged hands last month, the Turkish Statistical Institute (TurkStat) said, marking a 16.7% year-over-year increase, driven in part by the low base effect.

Property sales had dipped as much as 44.4% in June on an annual basis, the steepest decline this year, as residents struggled to find affordable homes due to soaring prices.

The TurkStat data showed July mortgaged sales fell 24.1% from a year earlier to 14,533 houses, accounting for 13.3% of total sales.

House sales plunged after catastrophic earthquakes ripped through the country’s southeast in early February.

The quakes claimed more than 50,000 lives, destroyed hundreds of thousands of buildings and severely damaged the southeastern region’s infrastructure. Businesses and officials put the overall damage at more than $100 billion (TL 2.71 trillion).

Fears of future tremors, particularly in Istanbul, Türkiye’s biggest city with a population of around 16 million and the country’s commercial engine, have made people rethink their plans for property purchases.

The increase in July was influenced by the low base effect in the same month a year ago that coincided with the bayram holiday and the tightening steps of the country’s banking watchdog, the Banking Regulation and Supervision Agency (BDDK).

Some 93,902 units exchanged hands in July of 2022, according to the TurkStat data.

Although remaining at high levels, the increase in house prices has been easing over recent months, according to official data.

The residential property price index (RPPI), measuring the quality-adjusted price changes of homes, surged an annual 121.25% in May, according to the central bank data. Month-over-month, the index rose 3.6%, the lowest increase in two years.

Households have been seeing real estate as an attractive investment tool to shield themselves from stubborn inflation, which subsequently eased to as low as 38.21% in June but rose again to nearly 48% last month due to the Turkish lira’s decline and various tax hikes.

Officials have acknowledged it would rise further toward the year-end. Inflation had leaped to a 25-year high above 85% last October.

Since the May presidential elections, President Recep Tayyip Erdoğan’s government orchestrated a U-turn away from policies based on interest rate cuts that had been accompanied by a steep fall in the lira and soaring inflation.

Since this June, the country’s central bank has reversed and hiked its policy rate by 900 basis points to address soaring prices. It also vowed to continue gradual monetary tightening.

In the first seven months of the year as a whole, house sales in Türkiye dropped 17.7% from a year earlier to 675,327 units, the TurkStat figures showed.

Mortgaged sales fell 24.1% from a year earlier to 136,063 houses.

In July, sales to foreigners dropped 28.9% from a year earlier to 2,801 houses, with 772 sold to Russian citizens, reflecting still how many have sought a financial haven in the wake of Moscow’s invasion of Ukraine and Western sanctions.

Iranian followed with 272 property purchases. Iraqis bought 204 houses, while some 146 units were sold to Ukrainian citizens, the TurkStat figures showed.

The Mediterranean hot spot Antalya topped the list for purchases by foreigners at 996 houses. Istanbul and another southern holiday gem, Mersin, followed with 832 and 263 house sales.

Home sales in 2022 dropped slightly by 0.4% year-over-year to nearly 1.49 million units. Purchases by foreigners hit record 67,490 houses, with sales to Russians accounting for almost a quarter of the total figure.