Addressing Housing Shortage: Examining Turkey's Struggle with Soaring Housing Demand
The Turkish government is taking decisive action to address its housing affordability challenges and surging living costs, driven by high rents and mortgage expenses.
State-run real estate developer Emlak Konut is set to launch the initial public offering of real estate certificates between Aug. 4-8, listed on Borsa Istanbul [1]. This move is part of a broader effort to increase investment in the housing market and improve financial inclusion.
The government's focus on increasing homeownership is evident in its plans to extend mortgage maturities significantly, from the current maximum of 10 years to between 30 and 50 years [1][3]. This move targets low-income households, making long-term housing loans more affordable. However, experts emphasize that longer loan terms must be paired with monthly payments aligned to household incomes to be effective [3].
Complementing these financial reforms, the government has launched a large-scale social housing project to build 500,000 affordable housing units [3]. This project is seen as a vital structural response to declining homeownership rates and rising housing costs.
Regarding rent inflation, which remains high (though slightly down from 92% in 2023 to 83%), the government initially imposed legal caps on rent increases (25%) but recently lifted this ceiling [1]. Officials argue that long-term market interventions like rent caps are ineffective in the long run. Various factors such as post-earthquake housing shortages and demographic changes also contribute to rent inflation [1].
In terms of financial innovation, Turkey introduced a tradable real estate certificate program [1][3]. This program allows citizens to invest in housing projects via shares listed on Borsa Istanbul. These certificates provide liquidity and represent an accessible entry point into the real estate market, potentially improving financial inclusion and education.
The number of newly constructed residential units in Turkey stood at 540,096 as of March 2025 on an annual basis [2]. However, the homeownership share among total households has been steadily declining each year over the decade, while the tenant share has risen [4].
Making the secondary housing market and tourism properties more visible and attractive will be key to attracting foreign capital to the Turkish housing market [5]. New policies could stimulate foreign investor interest if supported by revisions to tax and citizenship regulations [6].
It's worth noting that Turkey far outpaced all OECD countries in house price increases (nearly 21-fold) and rent increases (nearly 15-fold) over the past decade [7]. In 2024, 7M Turkish households pay rent, while 15.38M live in their own houses [8].
Experts like Nurbanu Turgen Zorlu consider the newly introduced tradable real estate certificate program in Turkey as an innovative investment model [9]. Zorlu also stressed that the difficulty of owning a home is not unique to Turkey but is a global trend, with Turkey ranking worst in the world in housing affordability in a 2024 study by the Centre for Economic Policy Research [10].
In Istanbul, the average rent rose to ₺29,939 ($767) with a 38.39% year-over-year increase [1]. More than two-thirds of households consistently stated that housing expenses strained their budgets, with this share reaching 84.8% in 2024 [11].
First-hand sales have shown a continuous decline over the decade, dropping from 47.1% in 2016 to 32.3% in 2025 [12].
In conclusion, the Turkish government is actively addressing the housing crisis through several key measures focused on increasing homeownership, controlling rent inflation, and introducing financial innovations like tradable real estate certificates. These measures reflect a combined approach of financial reform, increased housing supply, and market-based investment tools to address Turkey’s housing affordability challenges and surging living costs driven by high rents and mortgage expenses.
References: 1. Anadolu Agency 2. Statista 3. World Bank 4. Statista 5. Reuters 6. Hurriyet Daily News 7. OECD 8. Statista 9. Anadolu Agency 10. Centre for Economic Policy Research 11. Statista 12. Statista
- The Turkish government, under President Erdogan, is focusing on increasing homeownership and financial inclusion in Turkiye, as part of a broader effort to combat housing affordability challenges and surging living costs in Istanbul and Ankara.
- The government's initiatives involve extending mortgage maturities, launching a social housing project, and introducing a tradable real estate certificate program to increase investment in the housing market.
- These financial reforms aim to address the issue of high rent inflation, though experts note that longer loan terms and affordable monthly payments must be in balance to be effective.
- Economic experts like Nurbanu Turgen Zorlu emphasize that the difficulty of owning a home is a global trend, but Turkey ranks as least affordable for housing among all countries in a 2024 study by the Centre for Economic Policy Research.
