According to the Real Estate Price Index (KFE) of the Central Bank of the Republic of Turkey (CBRT), real estate prices, which had last increased by 1.4 percent per year in real terms in January 2024, began to decline in February, falling by 5.1 percent in real terms.
While the change in house prices in the intervening 28 months was above inflation only in November 2025 (0.3 percent), it fell in real terms in all other months.
While the real rate of decline increased in December last year, it reached 6.1 percent in May this year. The real rate of decline was 4.3 percent in April, 3.4 percent in March, 3.9 percent in February, 2.3 percent in January and 1.4 percent in December.
“The balancing process after the rapid rise”
Lecturer at the Faculty of Business Administration at Istanbul University, Prof. Dr. Ali Hepşen pointed out in his statement that the real rate of decline has increased in recent months and said: “Real estate sales have been quite strong in recent months. Under normal circumstances, we would have expected the recovery in sales volumes to be more clearly reflected in prices. However, the acceleration of the real decline surprised me.” he said.
Hepşen explained that there are several reasons for this and continued her words as follows:
“Firstly, a significant part of the increase in sales is not due to price expectations, but rather to the activation of delayed demand. In particular, in 2023 and 2024, those who postponed their purchase decisions are returning to the market. Thirdly, property prices have been well above inflation in the last two years: “The picture we see today is partly due to the balancing process that took place after this rapid increase.” Prices are rising in nominal terms, but the decline continues in real terms as the general price level rises faster.”
“Without a permanent reduction in interest rates, the return to real price increases will be limited.”
Prof. Dr. Hepşen pointed out that he does not expect another high double-digit real increase in property prices unless there is a significant decline in interest rates in the coming period, saying that prices may be higher than the Turkish average in regions where new production is limited and the supply of qualified housing is insufficient.
Hepşen emphasized that the duration of the decline in real prices largely depends on the inflation and interest rate outlook: “Under the current conditions, it is likely that real estate prices will continue to lag inflation in the second half of 2026. However, if the decline in inflation accelerates and there is a significant decline in home loan interest rates, the loss in real prices may gradually end.” he said.
Explaining that they expect the weak real rate to continue at least until the end of 2026, Hepşen said: “Because the demand for loans, which is the main factor driving the increase in property prices today, is not yet strong enough. We expect that the return to real price increases will be limited without a permanent decline in interest rates.” he said.
“I think it will take next year.”
Real estate economist Ahmet Büyükduman also noted that prices in the real estate market are under pressure from high real interest rates and said: “In this market, real estate prices and real interest rates are inversely proportional. They are like two ends of a seesaw. When real interest rates rise, real estate prices remain below inflation and fall in real terms.” he said.
Büyükduman explained that property prices will maintain this dynamic as long as the current monetary and high interest rate policies continue: “I think that the increase in property prices next year will remain below inflation.” he said.
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