Sales of residential properties in Turkey rose nearly 40% year-on-year in April, official data showed on Tuesday, with the upward trend continuing despite high borrowing costs and soaring prices. price.
The rise was also propelled by the pace of interest from overseas buyers, particularly Russians, who more than doubled their home purchases from a month ago as they sought financial refuge.
Home sales rose 38.8% in April to 133,058 units from 95,863 a year ago, the Turkish Statistical Institute (TurkStat) said, marking an all-time high for the month. .
It followed the highest March figure yet, with sales hitting 134,170, a 20.6% year-on-year increase. Sales on an annual basis jumped 113.7%, 25.1% and 20% in December, January and February, respectively.
The rise comes amid falling supply and soaring prices, but households continue to view real estate as an attractive investment tool to hedge against inflation which is peaking at nearly 70% for 20 years.
The government announced several measures earlier this month to boost home sales and deal with soaring prices that have jumped nearly 100% a year as residents struggle to find affordable homes in rent or buy.
The construction index climbed 102% year-over-year in March, according to data from TurkStat. The house price index also jumped 96% in February, according to central bank data. In Istanbul, the index climbed 106% over the year.
The data showed April mortgage sales rose 82.9% from a year earlier to 32,030, accounting for 24.1% of total sales for the period.
“It seems like everyone wants to invest in ‘safe’ real estate,” said Ziya Yılmaz, chairman of Dap Holding. “They’re right about that, because neither currencies nor gold have made investing as profitable as real estate,” he added.
The surge in sales this year came despite home loan interest rates above 1%, skyrocketing costs and skyrocketing prices, Yılmaz said.
Istanbul, Turkey’s largest city by population, had the highest share at 19.8%, or 26,330 home sales last month. It was followed by the capital Ankara with 12,195 sales and the Aegean province of Izmir with 8,459, giving them shares of 9.2% and 6.4%, respectively.
January-April sales rose 26.2% to 453,121 homes, despite high borrowing costs.
New loan formula
The growth momentum will continue as real estate is the most valuable hedge against inflation, said Inanç Kabadayı, Chairman of Ege Yapı.
The current demand is supporting expectations, Kabadayı told Anadolu Agency (AA), saying the measures recently unveiled by the government would boost sales in the coming period.
Under the program announced by President Recep Tayyip Erdoğan last week, cheaper home loans will be provided to those who convert their foreign currency savings into Turkish lira or sell their gold to the central bank for home purchases worth up to 2 TL. million ($127,150).
The rates on the loans would be 0.89% per month with a term of up to 10 years.
Ankara has called on individuals and businesses to convert their foreign currency savings into lira to support the currency and in December unveiled a program to increase lira deposits by protecting them against exchange rate volatility.
Erdoğan said the home loan measure would support that effort, reversing a trend of dollarization that has been going on for years.
He said loans of up to TL 2 million with a monthly rate of 0.99% and a tenor of 10 years would be given to the new owners.
Loans with a term of 36 months will be granted to construction companies to complete certain projects if they undertake to keep sales prices unchanged for one year.
Erdogan said the loan program for construction companies aims to increase the supply of housing, thereby bringing prices back into balance.
Russians top the list for the first time
Sales to foreigners rose 58.1% year-on-year last month to 6,447 units, TurkStat said. Russian citizens topped the list among nations in April for the first time ever, increasing their purchases 186.6% year-on-year to 1,152 homes from 547 in March.
They were followed by Iranians with 905 and Iraqis with 714.
Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates (UAE), seeking financial refuge in the wake of Moscow’s invasion of Ukraine and suffocating Western sanctions, according to many real estate companies.
Many Ukrainians fleeing the war flew to join relatives in Turkey, while others opted to rent or buy property.
They accelerated their purchases, buying some 263 homes in April, an increase of nearly 186% from 92 a year ago.
“After the war, interest not only from Russians but also from Ukrainians grew,” said Selman Özgün, chairman of Helmann Yapı.
“We can clearly see this increase in Antalya,” Özgün noted, referring to the Mediterranean resort town that has been a favorite holiday destination for Russians and Ukrainians for years.
While Turkey and the United Arab Emirates have criticized the Russian offensive, Ankara opposes non-UN imposed sanctions against Russia and the two countries have relatively good relations with Moscow and still operate direct flights.
Ankara is trying to balance its close ties with Russia and Ukraine and positioning itself as a neutral party trying to mediate to end the conflict.
“The safest country for Russians right now is Turkey. We hear that too,” said Hakan Sabbağ, sales manager at Akzirve.
“Previously they bought in Antalya, now they started investing in Istanbul and other cities,” Sabbağ noted.
“In fact, we have heard that some companies operating in Russia have told their staff that they can continue their work from Istanbul,” he added.
Sabbağ also noted increased interest from citizens elsewhere, including Kazakhstan, South Korea and China. He underscored expectations of even stronger real estate momentum this summer, which could be propelled in particular by demand from Saudi Arabia and other Gulf countries.
From January to April, home sales to foreign nationals reached 20,791 units, a 48.9% increase from the same period last year, the data showed.
Overseas home sales hit a record 58,576 units in 2021, a 43.5% year-over-year increase. The previous annual record was set in 2019 with 45,483 units.
Sales had accelerated as the depreciation of the pound made Turkish property more attractive to foreign buyers, with authorities continuing the new economic policy of low interest rates to boost credit, exports and investment, saying that this would help the country cope with inflation.
To support this dynamic, the central bank of Turkey had lowered the benchmark key rate by 500 points since September to 14%.