Despite the weight of high interest rates that have slowed access to credit, Türkiye’s housing market has witnessed a resurgence in investor interest, particularly from those seeking steady rental income. Recent data reveals a sharp rise in rents compared to property prices, making real estate an attractive option once again for both seasoned and new investors.
Housing Prices Fall Behind Inflation
According to the Central Bank of the Republic of Türkiye (TCMB), the housing price index rose 32.8 percent over the past year. During the same period, annual inflation reached 33.52 percent. This means that in real terms, property prices have slightly lagged behind inflation, creating an unusual dynamic in the market.
While sales prices remained constrained, the rental market told a very different story.
Rent Increases Outpace Inflation
Data from real estate analytics platform Endeksa shows that average rental prices nationwide surged from 167 TL per square meter last year to 224 TL in 2025. This represents an annual increase of 34 percent, surpassing the official inflation rate.
For investors, this widening gap has reignited interest in housing, particularly as rental income becomes a more powerful driver of returns in the current economic environment.
Surge in Property Sales Despite High Rates
Between January and July 2025, housing sales grew by 24.2 percent compared to the same period in 2024, with transactions nearing 835,000 units.
This increase came despite persistently high interest rates, suggesting that cash buyers and long-term investors targeting rental returns are fueling demand. Market experts point out that while borrowing costs deterred mortgage-dependent buyers, rising rental yields have shifted focus toward smaller, more affordable properties.
Growing Demand for Smaller Apartments
In the first week of September, the number of rental listings nationwide reached 176,000. Among them, 2+1 apartments made up the largest share with 60,000 listings, accounting for 34 percent of the total. This was followed by 52,500 units of 3+1 and 44,000 units of 1+1 properties.
Real estate professionals explain the trend by citing three main factors: rising construction costs, declining purchasing power, and the prevalence of nuclear family structures. Together, these dynamics have made compact apartments more appealing for both investors and tenants.
Why 2+1 Apartments Are in High Demand
The appeal of 2+1 and 1+1 homes is multifaceted. For investors, smaller apartments often provide a faster payback period due to their lower upfront cost and relatively strong rental demand. For tenants, these units are more affordable amid the pressures of inflation and high living expenses.
In many urban areas, developers are adapting by focusing on smaller layouts that align with current demographic and financial realities.
Top 10 Cities for Rental Yields in August 2025
The latest figures reveal which Turkish cities offer the highest rental yields for investors:
Ankara – 28,592 TL (10.47%)
Şanlıurfa – 15,929 TL (8.76%)
Tekirdağ – 19,846 TL (8.71%)
Van – 16,352 TL (8.37%)
Kahramanmaraş – 19,384 TL (8.26%)
Eskişehir – 17,451 TL (8.09%)
İzmir – 27,660 TL (7.96%)
Sakarya – 18,942 TL (7.92%)
Denizli – 15,305 TL (7.92%)
Hatay – 18,013 TL (7.91%)
Perhaps the most surprising outcome was the absence of Istanbul from the top ten list.
Why Istanbul Lost Its Shine
Long considered the epicenter of Türkiye’s real estate market, Istanbul has struggled to compete with Anatolian cities in rental yield performance. The combination of high property prices and extended payback periods has eroded the city’s investment appeal.
In contrast, mid-sized Anatolian cities now offer a more attractive balance of affordability and rental income, signaling a shift in market dynamics. For investors, this means that previously overlooked regions are emerging as new hotspots for real estate opportunities.
Broader Implications for the Real Estate Market
The divergence between property prices and rental growth highlights an evolving phase in Türkiye’s housing sector. While inflation and high interest rates continue to pressure purchasing power, rental demand has not slowed.
Experts caution, however, that this trend should not be viewed as risk-free. Economic volatility, potential regulatory changes, and fluctuations in housing supply could reshape the landscape quickly.
Still, the data suggests that investors chasing rental yields are likely to continue favoring smaller apartments in Anatolian cities, where entry costs are lower and rental returns stronger.
Editorial Note
The current shift in Türkiye’s housing market underscores how economic pressures can redirect investment patterns. As Istanbul loses ground in terms of rental profitability, smaller cities are seizing the spotlight. Whether this trend becomes a long-term realignment or a temporary adjustment will depend on inflation, interest rates, and the broader economic outlook in the months ahead.
