The Housing Price Index (KFE), which tracks the quality-adjusted price changes in Türkiye’s housing market, continued its upward trend in January 2025, rising by 4.7% from the previous month to reach 165.9. This marks a continuation of recent months’ price increases, which, after a long period of falling behind inflation, have now started showing real-term growth.
Despite the monthly rise, on an annual basis, house prices in Türkiye increased by 31.9% nominally, but when adjusted for inflation, they still declined by 7.2% in real terms. In comparison, the previous month’s annual nominal increase was 29.4%, reflecting a gradual acceleration in price appreciation. While housing prices have lost value against inflation over the past year, the recent months’ real-term increases suggest a potential recovery in purchasing power.
Price Changes in Major Cities
Breaking down the January figures by major cities:
- Istanbul: Prices increased 3.0% month-on-month, with an annual rise of 29.6%.
- Ankara: Prices surged 5.7% in January, recording a 36.6% annual increase.
- Izmir: Prices rose 4.9% in January, showing a 29.6% annual growth.
However, when adjusted for inflation, all three cities still experienced a real-term decline in house values compared to the previous year.
A Look at the Last 12 Months
According to the latest data from Türkiye’s Central Bank (TCMB), the KFE has shown consistent growth over the past year:
- January 2024 – January 2025: The index grew from 125.71 to 165.87, marking a 31.9% increase.
- Monthly Growth Trends: The highest monthly increase was in May 2024 (3.92%), while the slowest was in September 2024 (1.03%).
- Annual Trends: Yearly growth has been decelerating compared to 2023 when inflation-adjusted losses were more pronounced. In December 2023, annual nominal price growth was 83.14%, compared to 31.9% in January 2025.
This data indicates that while nominal price growth remains positive, the market has entered a phase of slower appreciation. However, the recent real-term gains suggest an improving balance between inflation and property value growth.
Market Reactions and Investor Sentiment
Following the latest KFE report, Turkey’s real estate-related stock indexes showed strong performance:
- BIST Construction Index (XINSA): Notable gains were recorded, reflecting investor optimism.
- BIST Real Estate Investment Trusts Index (XGMYO): Increased interest in the sector contributed to price movements.
- Emlak Konut: One of the largest players in the market saw a 7.53% rise in share value.
- Enka İnşaat: Shares climbed 3.28%, signaling confidence in the construction sector.
The increased investor interest suggests that despite the past year’s inflation-adjusted declines, there is renewed optimism in the housing market.
Türkiye’s real estate market remains in a period of transition. While nominal housing price growth continues, inflation has eroded some of these gains over the past year. However, the recent months’ real-term increases indicate a shift toward price stability. The ongoing price recovery in Istanbul, Ankara, and Izmir suggests that the market may be entering a new phase where property values align more closely with inflation.
Expectations from the Turkish Central bank.
Investors and homebuyers should closely monitor upcoming trends, particularly the Central Bank’s monetary policy, which will play a key role in shaping housing affordability and demand. If inflation continues to stabilize and interest rates become more favorable, Türkiye’s real estate market could see sustained growth throughout 2025.
The central bank is expected to drop rates throughout 2025 and has already started with a 2.50% drop in March 2025 from 45% to 42.5% (March 6, 2025). Much of the previous months price rises happened as a result of the expected drop in rates. With inflation cooling in March to 2.27% month-on-month (39% annual basis), there is room now for the central bank to continue on a path of economic stimulus.
