Homebuyers adopt wait-and-see approach as market cools

ISTANBUL  

Demand for housing remains high but the market has entered a period of stagnation in terms of sales.

Industry representatives and real estate developers say three main factors are influencing homebuying decisions, with rising mortgage rates emerging as the most significant obstacle, according to daily Milliyet.

Home sales remained subdued in May, largely due to public holidays and other vacation periods. The summer months, traditionally a holiday season, are also expected to be relatively quiet for the sector. According to market participants, the slowdown in residential property sales can be attributed to three key factors.

  Interest rates

A modest easing in mortgage rates during the final quarter of 2024 brought borrowing costs down to around 2.89 percent. Throughout 2025, several banks offered housing loans with rates ranging between 2.69 percent and 2.49 percent, and these conditions remained in place until about two months ago. However, the second half of 2026 has brought a renewed increase in mortgage rates. The lowest available housing loan rate currently stands at around 2.8 percent.
Rather than declining further, mortgage rates — widely seen by consumers as the biggest barrier to homeownership — have moved higher, leading many prospective buyers to postpone purchasing decisions.

 Investing in gold

At the same time, high loan repayments and the advantages of larger down payments under savings-based financing models have also affected buyer behavior. In recent years, many consumers redirected their savings from assets such as gold and foreign currency into the housing market. However, gold prices have remained well below expectations during the conflict involving Israel, the United States and Iran, limiting that option for the time being.

The decline in gold prices has encouraged consumers to wait for their savings to appreciate in value before making a property purchase. With gram gold falling below 6,000 Turkish Liras as of June 30, there is little incentive for investors to sell. As a result, many are focusing on expectations for the final quarter of the year.

 Home prices

Another frequently cited factor is the gap between buyer and seller price expectations. According to market participants, asking prices in the second-hand housing market — particularly those considered above justified levels — are discouraging buyers. Although real housing prices have not recorded significant increases, existing homes have reached price levels similar to newly built properties, prompting many potential buyers to adopt a wait-and-see approach.

While sellers continue to hold on to the pricing expectations formed during previous periods of rapid market appreciation, buyers are acting more selectively and taking a stronger negotiating position in light of current economic conditions.

Meanwhile, market participants note a growing public perception that a snap election could be on the horizon under the current political climate. This has contributed to a broader sense of caution, with some buyers preferring to wait for greater clarity before making major investment decisions.