Why Now is the Best Time to Buy Property in Turkey (Before Prices Rise!)

Turkey's real estate market is always shifting, and one key factor influencing property prices is the country's interest rates. With Turkish interest rates currently at historic highs, many potential buyers are waiting for them to drop before making a purchase. However, history has shown that the best investors in the Turkish property market act when others hesitate. In this article, we will explore why buying property in Turkey now—when interest rates are high—could be a smart move before prices start to climb, while also discussing the risks involved.

How Interest Rates Affect Property Prices

Interest rates and property prices are closely linked. Here’s how it works:

  • High Interest Rates = Lower Demand: When borrowing costs are high, fewer people can afford mortgages, reducing demand and leading to lower property prices.

  • Low Interest Rates = Higher Demand: When interest rates drop, borrowing becomes more affordable, increasing demand and driving property prices up.

Currently, Turkey's interest rates are high, with the Central Bank’s benchmark rate at 47.5% as of early 2025. This makes financing costly for mortgage buyers, but it also means that property prices are more negotiable and favorable for cash buyers or investors who can secure financing at stable rates.

Luxury beachfront properties in Alanya, Turkey during high interest rate period

What History Tells Us

Looking at past market cycles, real estate prices tend to rise as soon as interest rates decrease. Here are some key examples:

Turkey (2019-2021 Period):

In mid-2019, the Central Bank of the Republic of Turkey's policy interest rate was at 24%. By 2020, this rate had gradually been reduced to 8.25%. These interest rate cuts led to lower mortgage rates, which increased housing demand and resulted in a significant rise in real estate prices. However, the rate of increase in property prices varied depending on the region and specific time period.


United States (Post-2008 Financial Crisis):

After the 2008 financial crisis, the U.S. Federal Reserve (Fed) significantly lowered interest rates to stimulate the economy. This low-interest-rate environment also caused mortgage rates to decline, boosting housing demand. Real estate prices began to recover in the post-crisis period, and from 2012 onward, they followed a strong upward trend. Between 2012 and 2020, the U.S. housing market experienced steady growth.


European Market:

In European countries like Germany and Spain, the historically low interest rates set by the European Central Bank kept mortgage rates low as well. This increased housing demand and led to rising property prices. In Germany, particularly in major cities, real estate prices showed a significant increase. In Spain, after the 2008 financial crisis, the housing market stagnated, but low interest rates helped revive the market, leading to price increases.

Why Smart Investors Are Buying Now

  • Discounted Prices:

  • Property sellers are more flexible during periods of high interest rates, making now the ideal time to negotiate. This is especially true for cities like Istanbul, Alanya, and Antalya, where sellers may be more open to discounts due to reduced demand.
  • Less Competition:

  • Many buyers are waiting on the sidelines, giving proactive investors an advantage. This presents a prime opportunity to invest in properties in Alanya or luxury apartments in Istanbul before prices surge.

  • Future Appreciation:

  • Once interest rates start to drop, demand will rise, potentially leading to a significant price increase. Cities like Izmir, Bodrum, and Fethiye have seen strong appreciation in past cycles, making them attractive options for long-term investors.

Signing Real Estate Property Contract Agreement

Potential Risks & Downsides

  • Short-Term Price Volatility:

  • Property values may fluctuate before interest rate cuts lead to sustained price increases.

  • Financing Costs:

  • Buyers relying on mortgages may find the current rates too high, leading to higher overall costs.

  • Economic Uncertainty:

  • Changes in government policy, inflation, or external economic factors could impact real estate trends unpredictably.

Real Estate Home Search. House Check

Expert Opinions & Market Projections

Economists and real estate analysts predict that Turkey’s Central Bank will gradually lower interest rates in the coming months. According to recent projections, interest rates could drop to 30% by the end of 2025, which would likely trigger increased real estate demand and price hikes. Market experts foresee strong appreciation in Alanya's holiday homes, Istanbul's new developments, and Antalya's high-end real estate sector as demand rebounds.

Real estate economist Ahmet Büyükduman notes that since the second quarter of 2024, housing sales have been on an upward trajectory, a trend he expects to continue into 2025. He emphasizes that anticipated interest rate cuts could further stimulate the market, as lower rates make borrowing more affordable, thereby increasing demand.

Additionally, the President of the Real Estate Investment Trust Association (GYODER) predicts that housing sales in Turkey will exceed 1.4 million units in 2025. He suggests that the stabilization of real housing prices, coupled with potential decreases in interest rates, will accelerate sales.

These expert opinions align with the broader analysis presented, highlighting both the opportunities and risks associated with investing in Turkish real estate during periods of fluctuating interest rates.

Dr.Ahmet Buyukduman

Conclusion: Weighing the Pros and Cons

While many are waiting for interest rates to fall, savvy investors are taking action now. If you are considering buying property in Turkey, this period of high interest rates presents an opportunity to purchase at better prices before demand surges. However, potential buyers should carefully assess their financial situation, market trends, and economic forecasts before making a decision.

investors

Would you buy now or wait? Share your thoughts with us!

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