Expectations mainly drive demand in housing market
ISTANBUL
Expectations regarding interest rates and where home prices would be headed appear to be the main driver of the strong demand in the housing market, which has seen double-digit annual growth rates since July last year.
Last month home sales surged nearly 40 percent year-on-year to more than 112,000 units, buoyed by the 183 percent increase in mortgage-financed sales.
Consumers are once again turning to residential property, which had long been considered as a “safe haven.”
Demand for homes was weak during 2023 and in the first half 2024, when people parked their money at other instruments, such as deposit accounts which offered high returns, to protect themselves in an environment of rampant inflation.
But this appeared to have changed over the last months, with the anticipation that home prices will increase and home loans will become more costly.
This unleashed the pent-up demand in the housing market, according to the sector representatives.
In the past months, some deposit holders took their money out of banks and started to buy homes, thinking that home prices had hit bottom and would pick up in the period ahead.
Some consumers also are taking out loans to buy homes even though interest rates on home loans are still high.
Those who opted for this option assume that if interest rates decline more people will get loans to purchase homes, which will eventually drive prices higher.
Home prices rose 25 percent in January annually and 1 percent monthly in nominal terms.
However, when adjusted for inflation, home prices fell 13 percent year-on-year, according to Endeksa, which collects data on the housing market.
The average home price in Türkiye was 3.95 million Turkish Liras in January. For Istanbul, this was 5.3 million liras, according to Endeksa.
