House sales in Turkey leaped 113.7% year-over-year in December, official data showed on Friday, accelerating a surge a month earlier as locals opted to invest in real estate as a shield against soaring inflation.
Some 226,503 changed hands last month, the Turkish Statistical Institute (TurkStat) said, up from 178,814 units in November that marked a 60% year-over-year increase.
Real estate sales in December accelerated from a month earlier amid a depreciation in the Turkish lira, with the authorities pursuing the policy of low interest rates to boost exports and credit.
The data showed December mortgage sales rocketed 209.3% from a year earlier to 45,260.
The data came amid high volatility in the exchange rates after the Central Bank of the Republic of Turkey (CBRT) slashed its benchmark policy rate by 500 basis points to 14% since September.
The Turkish lira had fallen to a record low of 18.4 against the U.S. dollar in December before rebounding sharply the week before last after Erdoğan announced the scheme to encourage savers to convert deposits from foreign exchange, compensating depositors for any losses due to lira depreciation.
Turks see real estate as an investment to protect their savings from inflation, given real yields are deeply negative, said TSKB Real Estate Valuation Manager Makbule Yönel Maya.
“People have turned to real estate purchases from the moment inflation began to rise. Construction costs are consistently rising, this means housing prices are increasing, which support real estate investment,” she said.
Maya added that people also sought to purchase real estate in the last month of the year before taxes and fees were hiked in the new year.
In 2021 as a whole, total house sales fell 0.5% to around 1.49 million properties, with mortgaged sales down 49%.
The most popular place for house sales was Istanbul, with 276,223 sales, followed by the capital Ankara with 144,104 and the Aegean province of Izmir with 86,722.
Last year, sales surged due to cheap credit, as the central bank lowered its policy rate to fend off the impact of the coronavirus pandemic and state banks ramped up lending, prompting real estate developers to launch campaigns for buyers.
Driven by low-cost loans, overall sales in 2020 were up 11.2% year-over-year to nearly 1.5 million, an all-time high.
Monthly, annual record in sales to foreigners
Sales to foreigners jumped 77% year-over-year to 7,841 properties in December, the data showed, as the lira decline made purchases much cheaper in hard currencies.
It marked an all-time monthly high after exceeding the previous record set in November.
Property sales to foreign buyers were strong throughout the year and had exceeded the annual threshold of 50,000 units for the first time through November even before the year-end.
Sales to foreigners accounted for 3.9% of all housing sales and ended 2021 with a 43.5% year-over-year increase to hit 58,576 units, the data showed.
The previous annual record was set in 2019 when 45,483 houses were sold to foreigners in 12 months.
The most popular place for house sales to foreigners was Istanbul, with 26,469 sales, followed by the southern resort of Antalya with 12,384 properties and Ankara with 3,672.
Iranians were the top buyers with 10,056 units, followed by Iraqis with 8,661 and Russians with 5,379.
Among others, Afghans purchased 2,762 properties, while Germans bought 2,358 houses in 2021.
Foreigners had purchased around 40,812 properties throughout 2020, a 10.3% year-over-year decrease from 45,483 units in 2019. It still marked the second-highest annual figure ever.