Turkish Housing Market Roars Back as Rent Cap Lift Drives Demand

Turkey’s housing market is roaring back, spurred by the government’s removal of a rent cap earlier this year. 

Rising rents are pushing more Turks toward homeownership, while attractive deposit rates are prompting homeowners to sell amid lower rent-to-price ratios.

The removal of a 25% cap on annual rent increases in July gave a much-needed boost to the cooling housing market, with sales climbing for four consecutive months. October marked the highest monthly sales since 2022, driven largely by cash buyers benefiting from a rally in gold prices.

According to the Turkish Statistical Institute, home sales jumped 76.1% year-on-year in October, following a 37% increase in September. A total of 165,138 homes were sold last month, with mortgage-backed purchases accounting for 12.8% of sales.

“Buyers are returning as price-to-rent ratios improve,” said Ahmet Buyukduman, a real estate economist and managing partner at Istanbul Real Estate Office. “Demand is strongest for properties priced up to 4 million liras ($116,000), while luxury homes are seeing less interest due to more attractive deposit rates,” he said. 

Meanwhile, the rise in home sales could further complicate the Turkish central bank’s efforts to control inflation, which stood at 48.6% in October. The central bank has kept its policy rate at 50% for seven months, hoping cooling demand will ease inflationary pressures.

Last week, the central bank Governor Fatih Karahan expressed optimism about the slowing domestic demand and improvements in services inflation, which has been persistently high. He added that rent prices, a key driver of inflation, are expected to cool in the fourth quarter.

Gold Effect

Rising gold prices might be adding another layer of momentum to the housing market. Over the past year, gold — a traditional savings vehicle for Turks — has risen by as much as 40% against the dollar, helping homebuyers cash in their savings for property purchases. With gold-based home prices now returning to their six-year average, homes are becoming more affordable for those who saved in the precious metal.

Gold prices reached an all-time high of $2,790 an ounce in late October, before paring gains in November. Many Turks, particularly those who avoid interest-bearing accounts for religious reasons, have long stored their wealth in gold, which makes them less sensitive to rising interest rates.

“We’re seeing a lot of customers who have been holding gold for years now selling it to buy homes,” said Mehmet Ali Yildirim Turk, a gold trader at Istanbul’s Grand Bazaar. “The rally in gold prices has given them the perfect opportunity.”