Turkey's property market continues to perform strongly, though price rises have been slowing since the beginning of 2016.
The country's nationwide house price index rose by 13.98% (4.76% inflation-adjusted) during the year to July 2016, according to the Central Bank of the Republic of Turkey (CBRT), significantly slower growth in real terms than the 18.75% (11.18% inflation-adjusted) growth recorded during the same month last year.
In Istanbul, Turkey’s largest city, house prices surged by 17.68% (8.17% inflation-adjusted) during the year to July 2016.In Ankara, the country's capital, house prices were up by 9.16% y-o-y (0.34% inflation-adjusted) in July 2016.In Izmir, the country's third largest city, house prices rose by 14.71% y-o-y (5.43% inflation-adjusted) in July 2016.
Istanbul also saw the highest annual increases in newbuild housing prices, with a 15.33% (6.01% inflation-adjusted) during the year to July 2016, followed by Izmir at 11.91% y-o-y (2.87% inflation-adjusted), and Ankara at 11.55% (2.54% inflation-adjusted), according to the CBRT.
"Security concerns, Russian sanctions and mounting pressures on the lira are curtailing investment despite high demand and low supply characterising the wider property market," notes Kate Everett-Allen, Knight Frank's head of International residential research.
However the long-term outlook of the Turkish property market is still positive despite the failed coup attempt last July. “In the long-term, Turkey is likely to remain on the radar of investors, given the underlying market fundamentals of strong demand set against low supply,” according to Everett-Allen.
From 2007 to 2011, house prices in Turkey fell by 2% (-29% inflation-adjusted), as economic growth slowed sharply to 0.7% in 2008. In 2008 existing house prices plunged 14.65% after inflation, by 2.82% in 2009, by 3.54% in 2010 and by 2.39% in 2011.
Since then, home prices have risen continuously.
Foreign ownership in Turkey is ruled by the reciprocity principle. Citizens of countries that allow Turkish citizens or legal entities to own property in their country are allowed to acquire property in Turkey. Citizens of most EU countries (except for Belgium, Cyprus, Czech Republic and Slovakia), the United States, Canada and other countries in Asia, Latin America and Africa can freely purchase properties in Turkey.