Over the past few years, Istanbul has experienced direct economic fluctuations that affected the real estate market. Yet the overall trend has remained upward due to strong local and foreign demand. With interest rates in Turkey now declining, investors are asking an important question:

Will lower interest rates lead to higher real estate prices in Istanbul?

In this article, we explain the expected impacts and why the current period is considered one of the best times to buy property in Istanbul.

How Do Interest Rates Affect the Real Estate Market in Istanbul?

Interest rates play a central role in determining the cost of housing finance and therefore directly affect real estate demand.

When interest rates fall:

• Mortgage costs decrease
• Local demand for home purchases rises
• Investors shift toward real estate as a safer alternative to bank deposits
• Buying and selling activity increases in both residential and luxury developments

Since Istanbul is Turkey’s largest real estate market, the impact appears there first and more strongly.

1. Higher Demand Leads to Higher Prices

Lower interest rates make property purchases more accessible for both citizens and domestic investors. As financing becomes cheaper, a large segment of buyers who were waiting for favorable conditions return to the market, triggering a new wave of demand across Istanbul.

This higher demand quickly reflects in prices, especially in several key areas:

1. Increase in price per square meter in central districts

Prime areas such as Şişli, Maslak, Kağıthane, and Beykoz see noticeable price increases due to limited supply and consistently high demand. The scarcity of new projects pushes prices upward faster than the overall market average.

2. Rise in prices of ready-to-move properties

Ready apartments are always the most attractive option for buyers who want immediate housing or investment. When demand rises, their prices increase quickly due to limited inventory.

3. Appreciation in off-plan projects

Even under-construction projects witness strong demand from both locals and foreigners. In addition, construction costs—steel, concrete, labor—continue to rise, prompting developers to increase prices at each stage of completion.

Why is the effect stronger in Istanbul?

Istanbul has limited land availability, especially in central areas. With high demand, even a small interest rate movement is enough to spark a noticeable price jump. Foreign demand adds an additional layer of pressure, accelerating price growth.

2. Impact of Lower Interest Rates on Foreign Investors

Foreign buyers play a fundamental role in Istanbul’s real estate market, especially in luxury and newly developed zones. Lower interest rates create several advantages for international investors:

1. Higher local demand → higher annual appreciation

When interest rates fall, domestic buyers enter the market aggressively. This increased demand pushes prices upward, benefiting foreign investors seeking long-term capital gains.

2. Stronger investment opportunities in luxury developments

Premium areas such as Nişantaşı, Zeytinburnu, Maslak, and Beykoz typically attract the highest foreign demand. Lower rates enhance the appeal of these projects due to:

High construction quality

Prime central locations

Higher rental yields

Investors see this period as the ideal time to buy before the next price surge.

3. Higher resale gains within 2–3 years

As the market strengthens due to cheaper financing, property values rise faster. This creates high-return opportunities for resale within 24–36 months.

4. Increased demand for properties eligible for Turkish citizenship

• Lower interest rates mean rising demand → rising prices.
• For foreigners, this translates to a golden opportunity:
• Citizenship threshold remains fixed at $400,000
• Luxury project prices increase rapidly
• A 3-year holding period enables additional capital gains

As a result, properties suitable for citizenship tend to appreciate more than the general market average.

3. How Do Interest Rates Affect Rental Prices in Istanbul?

Although rental prices are mainly driven by supply and demand, lower interest rates create indirect—but strong—effects on the rental market:

1. Some tenants become buyers

Families who previously relied on renting due to high mortgage costs start transitioning to homeownership, reducing rental demand in the short term.

2. Fewer properties available for rent

As more investors buy homes for personal use or long-term holding, the supply of rental units decreases. This shortage leads to rising rental prices.

3. Higher property values → higher annual rents

When property values rise, landlords adjust rental prices accordingly to match the property’s new investment value.

4. What Do Experts Expect for Istanbul’s Real Estate Market After Interest Rate Cuts?

Most real estate developers and analysts agree that Istanbul is entering a new growth phase. Key expectations include:

1. Annual price increase of 15%–25%

• Projections indicate steady growth driven by:
• Rising domestic and foreign demand
• Increasing construction and land costs
• Limited supply in central districts
• Areas near business hubs, highways, and new metro lines will likely grow the fastest.

2. Strong rebound in luxury project sales

High-end areas such as:

Nişantaşı

Sarıyer

Zeytinburnu

Bakırköy

are expected to see significant demand—especially from foreign buyers seeking premium properties with strong future value.

3. Surge in demand for off-plan projects

Under-construction developments will become more attractive due to:

• Lower pre-launch prices
• Long, flexible payment plans
• High profit potential upon completion
• Protection against inflation

This makes off-plan investment especially suitable during periods of falling interest rates.

5. Is Now a Good Time to Buy Property in Istanbul?

The short answer: Yes—strongly.

All economic indicators suggest that Istanbul is entering a growth cycle driven by lower interest rates and rising demand.

The real estate market follows a predictable cycle:

Lower interest rates → higher demand → higher prices

This means the best opportunities are always before the major price surge.

Why is now the ideal time to buy?

1. Benefit from current prices before the next increase

Historically, every period of declining interest rates has been followed by a strong price wave—especially in cities like Istanbul where demand is constant.

2. Higher resale profits

With expected annual growth of 15%–25%, investors entering the market today can achieve strong capital gains within a relatively short period.

3. A golden window for Turkish citizenship investment

Many citizenship-eligible properties at $400,000 are rising quickly in value. Buying now ensures purchasing within the threshold before prices exceed it.

4. A safe investment in a global city

Istanbul is an international economic and cultural center with:

• Constant population growth
• Strong infrastructure
• High domestic and foreign demand

This makes it a stable and low-risk long-term investment market.