In recent years, Turkey’s property market has been the scene of phenomenal growth, attracting both local and foreign investors with promises of rapid capital gains. However, the astronomical price increases, often reaching triple-digit percentages annually, inevitably raise an alarming question: are we witnessing the formation of a classic real estate bubble that is about to burst in 2025? Analyzing the situation requires an objective look at the driving forces and hidden risks.
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Arguments “For”: Signs of a Real Estate Bubble in Turkey
Several key factors support the thesis that the market is overheated and carries serious risks of a sharp and painful correction.
Hyperinflation and Lira Devaluation
The main driver of the frantic demand for property in Turkey is high inflation, which devalues savings in Turkish lira. For the local population, real estate has become the primary safe haven for preserving capital value. This situation has created artificially inflated demand, not based on actual housing needs, but on speculative and defensive motives. When a large part of the population buys assets out of fear, this is a classic sign of a real estate bubble forming.
Record-Breaking but Unsustainable Price Growth
Data from the Central Bank of the Republic of Turkey (CBRT) and other independent analysts show nominal price growth that is among the highest in the world. Although a slowdown was observed in 2024 and early 2025, prices continue to rise. Such a rate of appreciation is fundamentally unsustainable in the long term, as it far outpaces the growth of incomes and the economy.
Construction Boom and Risk of Oversupply
In response to high demand, Turkey’s construction sector is operating at full capacity. Large-scale new complexes are emerging in major cities and resort areas. However, there is a real risk that supply could exceed sustainable demand, especially if economic conditions change. A sudden market “cooldown” could leave developers with thousands of unsold properties, leading to downward price pressure.
Dependence on Foreign Buyers
It’s no secret that a significant portion of demand, especially in the luxury segment, is driven by foreign investors, many of whom are attracted by the “citizenship by investment” program. This dependence makes the market vulnerable to external shocks—geopolitical tensions, changes in legislation, or economic crises in the buyers’ home countries. An outflow of foreign capital would have an immediate negative effect. That’s why it’s crucial to conduct a thorough investment in Turkey: How to check the seismic resistance of the building before purchase (Practical tips).
Arguments “Against”: Factors for Market Stability
Despite the worrying signals, there are also powerful counterarguments suggesting that the Turkish market has solid foundations and is more resilient than it appears.
Strong Domestic Demand and Demographics
Turkey has a young and growing population of over 85 million. Urbanization processes, combined with cultural specifics (young people strive to own their own homes), create a constant and strong domestic market. This demographic base provides a baseline level of demand that is not dependent on speculative sentiment.
Need for Modern and Earthquake-Resistant Buildings
The tragic earthquakes of 2023 were a painful reminder of the country’s greatest risk. This has boosted demand for new, high-quality, and above all, earthquake-resistant construction. Urban renewal programs and the need to replace a vast stock of obsolete buildings are powerful drivers for the construction sector that will sustain demand for the foreseeable future. Every investor must be aware that the property in Turkey: the huge earthquake risk that brokers don’t talk about is the number one factor.
Limited Use of Mortgage Lending
Unlike many Western markets where bubbles are inflated by cheap and easily accessible credit, a large portion of transactions in Turkey (especially those involving foreigners) are financed with cash. This makes the market significantly less vulnerable to rising interest rates, as a chain reaction of mass mortgage defaults is less likely.
Turkey Property Forecast for 2025: Correction or Crash?
Instead of a catastrophic burst of a real estate bubble, it is more likely that we will witness a market correction and a “cooldown” period in 2025. The central bank’s efforts to control inflation by raising interest rates are already showing results, albeit slowly.
The forecast is that nominal price growth will slow down significantly, and a real decline is entirely possible in some overheated areas and luxury segments. The market will normalize and stratify—high-quality, well-located, and earthquake-resistant properties will hold their value better than those in the lower-end. For investors, this means the era of easy and quick profits is coming to an end. Instead, the need for careful selection and in-depth analysis of each individual asset comes to the forefront, as described in our guide for international investors on how to buy property in Turkey.
In conclusion, talking about an imminent market crash is probably an exaggeration. But ignoring the signs of a bubble would be equally unwise. The market is entering a mature phase of correction that will separate the speculators from the strategic investors.
This post is also available in: Български
