Interest Rate Policy Shift in 2025

The Central Bank of the Republic of Turkey (CBRT) launched a series of interest rate reductions in early 2025, easing from a historically tight monetary stance. The benchmark one-week repo rate dropped from 45% to 42.5% by March, and analysts expect it to decline further, reaching 31–38% by year-end.

The CBRT’s approach reflects a strategy to align monetary policy with cooling inflation while maintaining economic stability and supporting growth.

Economic Context: Inflation and Policy Outlook

• Inflation Trends: For the first time in two years, annual inflation dipped below 40%, paving the way for gradual rate cuts.
• 2025 Targets: The central bank projects inflation to ease toward 24% by year-end, with further disinflation expected through 2026–2027.

Impact on Real Estate: Key Trends

1. Improved Mortgage Affordability and Higher Demand

Lower borrowing costs are making mortgages more accessible, boosting housing affordability for domestic buyers and investors. This is expected to unlock pent-up demand, especially from first-time buyers and families.

2. Property Price Growth

Historically, interest rate cuts trigger price increases in major cities. Istanbul, Ankara, and Izmir are likely to see heightened demand.
Foreign buyers could also re-enter the market, drawn by favorable lira-based pricing and improving economic stability.

3. Revitalization of the Construction Sector

With cheaper financing, developers are expected to resume stalled projects and launch new residential and mixed-use developments, supporting supply expansion.

4. Boost Across Market Segments

Commercial real estate—particularly office and retail spaces—is likely to benefit from improved business sentiment.
Luxury and holiday property markets in Istanbul, Bodrum, Antalya, and Izmir are positioned for growth as international demand rebounds alongside strong tourism.

5. Risks and Caution

While demand and prices are on the rise, economic and currency volatility remain potential challenges. The CBRT’s gradual, data-driven policy aims to avoid overheating the property market.

Quick Snapshot: 2025 Real Estate Effects

Outlook: What Investors Should Watch

The CBRT’s easing cycle is fueling optimism in the Turkish property market, enhancing affordability and driving renewed investor interest. Key cities and coastal regions—particularly Istanbul, Bodrum, and Antalya—are expected to benefit the most. However, careful monitoring of inflation and currency stability will be essential to sustain long-term growth.