Cautious optimism in the construction sector: Price increases take center stage as interest rate expectations wane

The results of the first survey reflecting housing sector forecasts for 2026 have been shared with the public. In the research conducted jointly by KONUTDER and NielsenIQ Turkey, it was observed that while optimistic expectations regarding interest rates have significantly decreased, the expectation of a rise in housing prices has strengthened.

The survey, conducted with the participation of members of the Association of Housing Developers and Investors, revealed the current dynamics of the construction and real estate sector and the trends for the next six-month period.

While the expectation of an interest rate cut was expressed by nearly everyone last year, this rate has fallen to 54.2 percent in the new survey. More than a third of the participants do not expect any change in interest rates. The rate of those expecting interest rates to rise was recorded at 12.5 percent.

While the proportion of those who believe that housing sales with loans will increase fell from 76 percent to 50 percent, the view that the current level of sales will be maintained gained weight. Those expecting a decrease formed a group of 12.5 percent.

The proportion of those expecting an increase in first-hand housing sales in the next six months was pulled back to 41.7 percent; more than half foresee a balanced trend in sales figures.

Regarding housing sales to foreigners, the view that interest in Turkey will increase again due to the impact of rising geopolitical risks in the Gulf region came to the fore. The proportion of those who believe that sales in this area will increase rose to 33.3 percent in the latest survey. In the previous period, this rate was only 4 percent.

The proportion of those who think that housing prices will move upward reached a remarkable level of 83.3 percent. Participants pointed out that rising construction costs and especially the increase in material prices are putting pressure on prices. The proportion of those anticipating an increase in total costs was also 83.3 percent. Furthermore, the expectation of an increase in labor costs was determined to be 70.8 percent.

A positive signal regarding production in the sector also stood out. While the proportion of those expecting an increase in housing production rose from 28 percent to 37.5 percent, more than half of the sector maintains the opinion that production will continue at current levels.

It was noted that expectations remain in production within the scope of urban transformation. Although those anticipating an increase in this area reached 58.3 percent, the rate showed a slight decline compared to the previous period.

It was determined that the rate of increase in rents shows a tendency to slow down. While 62.5 percent of the survey participants predict that rental prices will increase, the proportion of those who believe that prices will remain stable rose to 37.5 percent. This result indicates that the momentum in the rental market has slowed down somewhat.

According to the survey, 70.8 percent of sector representatives are preparing to develop new projects or start sales in the next six months.

KONUTDER President Ziya Yılmaz stated the following regarding the research results: “Recent global developments and especially the increasing geopolitical risks in the Gulf region bring with them a more cautious picture in sector expectations. The weakening of the interest rate cut expectation, which was quite strong in the previous period, is directly reflected in the forecasts for credit-supported sales.”

“We see that the sector is displaying a strong stance on the production side. The rise in the expectation of production growth and the determination of a significant portion of our members to continue with new projects show that the housing sector evaluates this process as a periodic fluctuation.”

Furthermore, stating that developments in the Gulf region could affect the direction of real estate investments, Yılmaz emphasized that Turkey maintains its status as a “safe haven” for investors with its strong domestic market and strategic location.

Reminding of the housing sector's fundamental role in economic growth and its importance in terms of social welfare, Yılmaz expressed that holistic policies are needed for a balanced and sustainable market.

News Source: 12punto