Mortgage Boom Masks Slump in Foreign Buyers as Turkey Home Sales Rise

February snapshot: a mixed report card for property Turkey

If you follow property Turkey, February 2026 showed a split market: strong activity driven by domestic mortgage demand coupled with a clear drop in foreign purchases. According to Turkish Statistical Institute (TÜİK) data released on March 13, total housing transactions rose 5.9% year-on-year to 124,549 units, while mortgage-backed home sales surged by 42.3% to 25,035 transactions.

That jump in credit-driven purchases is the headline number many will focus on, but beneath it the picture is nuanced. New home sales reached 37,785 (up 5.9%) and existing-home sales rose to 86,764 (up 6%), giving a split of 30.3% new and 69.7% resale in total transactions. At the same time, sales to foreign nationals fell 2.9% in February to 1,506 units, representing only 1.2% of total transactions for the month.

In the first two months of 2026 overall sales hit 236,029 units (up 0.6% year-on-year), and mortgage-financed sales for January–February jumped 29% to 45,298. These are not marginal shifts; they highlight how financing conditions and buyer composition are shaping near-term market dynamics.

What is driving the mortgage surge?

The most immediate takeaway is that credit is powering transactions. Mortgage-backed sales rising 42.3% in a single month is large by any standard and suggests several interacting forces at work.

• Banks and non-bank lenders are likely offering terms that make buying with a mortgage more attractive compared with cash purchases. We do not have loan-by-loan terms in the TÜİK release, but a rapid uptick in mortgage volume typically reflects either cheaper borrowing, higher loan-to-value (LTV) allowances, or both.
• Domestic demand is responding to those terms. Domestic buyers previously priced out by cash-only markets are returning through financing.
• The stock of available finished and near-finished homes—supported by healthy construction output—means buyers can convert credit into transactions rapidly.

For investors this shift matters because a market propelled by mortgages changes short-term risk and return profiles:

• Mortgage-driven demand tends to be more interest-rate sensitive. If inflation or monetary policy shifts push rates higher, affordability can deteriorate quickly.
• Where mortgages enable buyers to afford pricier homes, there can be upward pressure on prices in segments where lenders expand exposure.
• Conversely, higher leverage across borrowers can increase downside risk if employment, incomes, or lending terms weaken.

In our analysis, the mortgage surge is impressive but risky: it expands the buyer pool and liquidity, yet it tightens the market’s linkage to macroeconomic cycles and bank balance sheets.

Foreign buyers: retreat continues, but who is still buying?

February continued the decline in foreign demand that has been visible since 2024. Sales to foreign nationals dropped 2.9% in February to 1,506 units, and for the first two months of 2026 they were down 12.1% to 2,812 units.

Looking at nationalities, the largest groups in February were:

• Russia: 191 purchases
• Iran: 131 purchases
• Iraq: 106 purchases

Total foreign purchases for 2025 were 21,534 homes — a 9.4% decline year-on-year. That downward trend affects segments of the market disproportionately. Resorts, coastal second homes, and some central-city condominiums have been more dependent on foreign buyers for price support and turnover. A sustained slowdown in inbound buyer demand will affect price discovery and liquidity in those submarkets.

Why are foreign purchases falling? The TÜİK release supplies the raw numbers but not the cause. From a market-insider vantage point, several factors likely intersect:

• Currency volatility and exchange-rate moves affect purchasing power for foreign buyers.
• Changes in Turkish residency or citizenship-by-investment regulations over recent years have altered incentives.
• Geopolitical and regional economic shifts influence buyer flows from Russia, Iran, Iraq and beyond.

For international investors or property developers, the practical consequences are:

• Expect thinner resale markets in buyer segments that historically leaned on overseas buyers.
• Price competition could increase among sellers targeting locals rather than foreigners.
• Rental markets in tourism-driven areas may face divergent performance if holiday demand does not compensate for weaker foreign acquisitions.

We advise buyers and investors to run sensitivity checks that assume a continued low share of foreign purchases and to stress-test yields and exit assumptions accordingly.

New, existing and commercial property: differing trends

The composition of transactions matters for valuation and investment strategy. In February:

• New-home sales: 37,785 (up 5.9%)
• Existing-home sales: 86,764 (up 6%)

The majority of transactions remain in the secondary market, but the growth in new-home sales indicates ongoing absorption of recent supply. For developers and investors, an increase in new-home sales is a signal that supply is being taken up—often financed by mortgages.

Commercial property painted a different picture. Commercial transactions fell 1.1% year-on-year to 15,069 in February, yet mortgage-backed commercial property sales jumped 62.8% to 692 transactions. Over January–February total commercial sales were down 7.2% to 28,336.

This split—fewer commercial deals overall but a rise in financed commercial purchases—suggests a selective use of debt in the commercial market. Lenders may be backing fewer but larger or more creditworthy deals, or developers may be refinanced via commercial mortgages as opposed to equity.

For real estate investors:

• Less volume in commercial sales points to slower repositioning of assets and possibly higher holding periods for owners.
• A pick-up in financed commercial deals is an opportunity if you can access lending, but it also increases counterparty and funding risk.

Construction production: where supply comes from

Separate TÜİK data showed resilience in construction activity. The construction production index rose 8% year-on-year in January. Breaking that down:

• Building construction: +8.1%
• Civil engineering: +8.8%
• Specialized construction activities: +7.1%
• On a monthly basis the overall index rose 0.9%

Active construction means the market is still adding stock. For potential buyers and investors this has immediate implications:

• Ongoing supply can check rapid price appreciation in hot micro-markets if absorption does not keep pace.
• Developers who are completing projects may be more willing to negotiate pricing or offer incentives to secure sales, especially where they depend on mortgage uptake.
• Areas with heavy civil engineering activity suggest public-sector or infrastructure-led investments that can change catchment economics in the medium term.

We read the construction numbers as a confirmatory sign: the sector is producing product that credit is converting into transactions. But the balance between new completions and effective demand will determine whether prices hold or soften in targeted locations.

What this means for buyers and investors: tactical guidance

We interprete these data as a market in transition.