Turkey Property Market, July 2026: Total Sales Down 17%, Mortgage Sales Up 23.7%

A translation and analysis of the weekly economic bulletin of the Istanbul Chamber of Commerce Centre for Strategic Studies (İTOSAM), covering 10–14 August 2026.

Covered here: balance of payments, bond yields, real returns on financial instruments, the trade sales volume index, sectoral output indices, turnover indices, house and commercial unit sales, and payroll employment.

1. Balance of payments — June 2026

"The current account recorded a deficit of USD 4.2 billion in June"

According to the Central Bank of Turkey's balance of payments report, the current account recorded a deficit of USD 4.2 billion in June 2026. Excluding gold and energy, the same period showed a surplus of USD 1.5 billion. On annualised data, the cumulative twelve-month deficit through the end of June reached USD 38.9 billion.

The trade deficit as defined in the balance of payments stood at USD 8.5 billion in June; goods exports were USD 24.4 billion and goods imports USD 33.0 billion. The services balance, driven by tourism and transport items, posted a net inflow of USD 6.9 billion, taking the annualised services surplus to USD 63.7 billion.

The bulletin's original table is headed "USD million", but its values are on a USD billion scale; the unit has been corrected above.

Analytical reading: the gap between the two figures is telling — a USD 4.2 billion deficit against a USD 1.5 billion surplus excluding gold and energy. It means Turkey's entire current account deficit today is a product of energy imports and gold demand, not of weak industrial competitiveness. Given regional tensions and the energy price pressure highlighted in last week's bulletin as well, this composition leaves the deficit highly sensitive to an energy shock.

Financing the deficit

On the financing side, portfolio investment recorded a net inflow of USD 2.5 billion, while banks and other sectors took net borrowing of USD 3.5 billion and USD 1.8 billion respectively. Within the financing mix, official reserves rose by a net USD 1 billion and net errors and omissions were an inflow of USD 39 million.

Worth noting: net errors and omissions over the twelve-month period stand at minus USD 20.4 billion — a figure equal to more than half of the entire current account deficit. Unrecorded capital outflow on that scale weakens the quality of the official financing picture, and is one reason the IMF's assessment of reserve adequacy (78.7%) should be taken seriously.

2. Long-term bond yields

The US Federal Reserve held its policy rate in the 3.50–3.75% range at its July meeting. Even so, the US 10-year yield reached 4.70% and the 30-year rose above 5.20% — the highest level in nineteen years. The drivers of that increase:

Growth: a strong labour market and resilient consumption in the United States have prevented any pronounced slowdown in activity, reinforcing expectations that high rates will persist.

Inflation: recent data show signs of moderation, but it is still early to say prices are durably approaching the Fed's 2% target.

Government debt: a large budget deficit and rising US debt require greater bond issuance, and investors demand a higher yield to hold it — direct pressure on the 10- and 30-year maturities.

Monetary policy: the positions of Kevin Warsh, the new Fed chair, imply resistance to inflation, but continued selling in long-dated bonds shows investors still see the risk around the future path of inflation and policy as unresolved.

This trend is not confined to the United States. Concern over the persistence of inflation is a common factor across countries; in Japan the government's rising debt is the more decisive one, in the United Kingdom real rates and inflation expectations act together, and in Europe the main weight is on inflation expectations.

Why this matters to you: the US long bond yield is the floor on the cost of dollar financing worldwide. Its climb to a nineteen-year high means loans and project finance in foreign currency get more expensive, and at the same time the relative appeal of emerging-market assets — Turkish real estate for the foreign investor among them — declines. This external backdrop is exactly what citizenship-by-investment programmes are competing against.

3. Real returns on investment instruments — July 2026

The Turkish Statistical Institute published real returns on financial instruments for July. Over the monthly horizon, the highest real return was 1.29%, on gross bank deposit interest. On an annual assessment, gold bullion returned 8.05%, the highest, followed by the BİST 100 index at 2.73%. All other instruments posted negative real returns.

The most important number in this section: holding dollars over the past year lost 11.16% of purchasing power, and euros 13.15%. In other words the lira moved far faster than adjusted inflation, and foreign currency as a store of value has been loss-making for a year. This is precisely what the IMF described as a "12.1% overvaluation of the lira". For anyone with lira costs and foreign-currency income this is a warning, not good news: the purchasing power of foreign currency inside Turkey is eroding.

4. Trade sales volume index — June 2026

The trade sales volume index recorded a 1.9% increase on the previous month and a 4.5% decrease on the previous year. Broken down by item and against the previous month: sales volume in wholesale and retail trade and repair of motor vehicles and motorcycles fell 13.8% and wholesale trade volume fell 9.4%, while retail sales volume posted an 11.8% increase.

Divergence inside the trade sector: retail up 11.8%, wholesale down 9.4%. This pattern usually means final household consumption is holding up while the supply chain is running down inventory — wholesalers are not ordering because they expect weaker demand. The 13.8% collapse in vehicle sales is likewise consistent with the general picture of weak credit-driven demand.

5. Sectoral output indices — June 2026

Industrial output grew 0.1% on the month but fell 1.4% year on year. Construction output fell 0.5% on the month and 6.0% on the year, while services output grew 0.6% on the month and 1.3% on the year. Of the three principal output indices, therefore, only services was positive on an annual basis, and the sharpest contraction was in construction.

Within industry, manufacturing output was unchanged on the month and fell 1.5% on the year. The mining and quarrying index fell 0.5% on the month and 1.6% on the year, while the index for electricity, gas, steam and air conditioning production and distribution rose 1.5% on the month and 1.1% on the year.

In construction, building output fell 0.4% on the month and 7.5% on the year, while civil engineering works grew 0.1% on the month and 4.5% on the year. Specialised construction activities fell 1.0% on the month and 7.6% on the year.

A warning for the construction sector: the combination of three numbers — building construction −7.5%, specialised construction activities −7.6%, and real estate activities −8.8% — shows the contraction running through both building and property transactions. The sole exception is civil engineering works at 4.5% growth, which largely reflects infrastructure projects with public clients. Which is to say: private construction demand is weak and public demand is what is holding the market up.

6. Turnover indices — June 2026

The total turnover index, covering industry, construction, trade and services, fell 0.3% on the previous month and rose 25.8% on the previous year. By sector, the highest annual turnover growth was in services at 31.3%, followed by construction at 29.9%, industry at 26.7% and trade at 23.5%. Among sub-sectors, information and communication services grew most at 39.8%, and real estate least at 13.5%.

An important methodological point: turnover is measured at current prices. Nominal growth of 25.8% against consumer inflation of 31.75% means real turnover contracted by roughly 4.5% — a figure that lines up exactly with the fall in trade sales volume (−4.5%). In real estate, with nominal growth of 13.5%, the real decline reaches around 14%. High nominal growth in this environment is not the same thing as business growth.

Note also that the bulletin's second chart, headed "monthly changes", shows figures in the 21–47% range that are inconsistent with the report's own text; these are most likely annual changes, and this document uses the figures from the original text.

7. House and commercial unit sales — July 2026

Total house sales across Turkey in July 2026 fell 17.0% year on year to 123,603 units. Over the same period mortgaged (ipotekli) sales rose 23.7% to 23,888 units, while other sales fell 23.1% to 99,715 units. Mortgaged sales accounted for 19.3% of the total and other sales for 80.7%.

First-hand house sales fell 8.6% to 42,529 units and second-hand sales fell 20.8% to 81,074 units (a 34.4% share against 65.6%). Sales to foreign nationals grew 1.9% to 2,120 units — a 1.7% share of the total.

At provincial level, in Istanbul 22,594 residential units were sold in July: 27.0% first-hand and 72.9% second-hand. Mortgaged sales accounted for 23.2% in Istanbul and other sales for 76.7%.

In commercial units, 16,733 were sold nationwide in July. First-hand commercial sales rose 16.4% to 5,777 units, while second-hand commercial sales fell 12.2% to 10,956 units. Mortgaged commercial sales jumped 57.6% to 695 units. In Istanbul 3,485 commercial units were sold: 38.7% first-hand and 61.2% second-hand, with a mortgaged share of only 3.4%.

The most important signal in the property market: the market as a whole has contracted 17%, yet mortgaged sales have grown 23.7% — and 30.9% across the first seven months of the year. Which means the composition of the buyer is changing. The cash buyer, the investor and the store-of-value buyer, is leaving the market, and the credit-dependent end-user buyer is taking their place. For projects being sold, this means payment-plan design and bank partnership are more decisive today than pricing alone.

Second point: first-hand housing fell only 8.6% against 20.8% for second-hand. New supply is showing greater resilience than the secondary market — across the first seven months, first-hand was almost unchanged (−0.8%) against −7.5% for second-hand.

Third point: the 57.6% jump in mortgaged commercial unit sales against a mortgaged share of only 3.4% in Istanbul means that growth occurred largely outside Istanbul.

An error in the bulletin: the table headed "Commercial unit sales (Turkey)" in fact displays house sales figures (123,603 and 823,119). In the table above these figures are presented as housing data.

8. Payroll employment — June 2026

Total payroll employment across industry, construction and trade-services rose 2.5% year on year in June, reaching 16 million 334 thousand 751 people. The strongest annual growth was in construction at 7.1%, with trade-services growing 3.5%. Industry, by contrast, fell 1.1%; the loss of industrial employment over the past year has reached 54,682 people.

On a monthly basis, total payroll employment grew only 0.1%. Over the same period employment rose 0.9% in industry, 0.8% in trade-services and 2% in construction — meaning every sector posted monthly growth in June.

An apparent contradiction that needs explaining: construction output fell 6% year on year, yet employment in the same sector grew 7.1%. Three plausible explanations: (1) a shift from building projects to infrastructure projects, which are more labour-intensive, supported by the 4.5% growth in civil engineering works; (2) formalisation of previously informal labour; (3) a lag between the fall in activity and workforce adjustment. In all three cases the conclusion is the same: labour productivity in construction is falling and the labour cost per unit of output is rising.

Industrial employment, by contrast, has fallen from its June 2024 peak (5,000,752 people) to 4,834,050 — below the two-year average of 4,896,788. With the PMI having stayed below the threshold for 28 months, this decline is structural rather than seasonal.

9. Analytical conclusions

a) Two economies in one country

The picture this bulletin builds is one of clear divergence: services is the only sector with positive annual output growth (+1.3%) and the highest turnover growth (31.3%), against industry (−1.4%) and construction (−6.0%), both of which are contracting. Industrial employment is falling and construction employment is rising without output behind it. Investment in the tradable sector is weak.

b) Nominal growth, real contraction

Every growth figure in this bulletin is nominal and has to be adjusted for 31.75% inflation: turnover +25.8% nominal → roughly −4.5% real; real estate +13.5% nominal → roughly −14% real. The trade sales volume index, which is measured in real terms directly (−4.5%), confirms that reading.

c) Practical implications for property and construction

Buyer financing is the decisive variable this year. Mortgaged sales growing 30.9% over seven months against an 11.7% fall in cash sales makes the market's direction clear.

The relative advantage of new build. A −0.8% fall for first-hand against −7.5% for second-hand across the seven-month cumulative means new supply still holds the better position.

Labour cost. Construction employment growing 7.1% alongside a 6% fall in output puts direct pressure on cost per square metre.

The foreign investor. Sales to foreign nationals grew only 1.9% and their share fell to 1.7% — a historic low. With US bond yields at 4.7% and negative real returns on foreign currency inside Turkey, the appeal of foreign capital entering property is under pressure from both sides.

d) The risk to keep watching

A current account deficit of USD 38.9 billion, net errors and omissions of minus USD 20.4 billion, and reserve adequacy below the IMF's recommended level all point to one conclusion together: the lira's path depends on capital inflow, and high global bond yields make precisely that inflow more expensive. For long-dated foreign-currency obligations, hedging is cheaper today than it will be tomorrow.

This document is a translation and analysis of the weekly economic bulletin of the Istanbul Chamber of Commerce Centre for Strategic Studies (İTOSAM) dated 14 August 2026. The data are drawn from the sources cited in the bulletin (TCMB, TÜİK, Investing.com). The sections headed "Analytical reading", "Worth noting", "A warning", "Implications" and "Conclusions" are added interpretation and are not part of the original bulletin text. Two internal inconsistencies in the original bulletin (the turnover chart and the heading of the commercial unit sales table) are marked in the text.