Residential property sales in Türkiye reached their highest level this year in August, according to the country's statistical authority on Tuesday, while separate data showed home prices continued to fall in real terms.

The housing market had been struggling after authorities launched aggressive tightening more than a year ago to curb stubborn inflation that has plagued households.

However, sales rebounded in July and maintained an upward pace in August, rising 9.9% on a yearly basis to 134,155 units, the Turkish Statistical Institute (TurkStat) said. That is up from 127,088 homes that exchanged hands in July.

The downward trend continued in mortgaged house sales, which fell by 17.1% last month to 13,574, accounting for 10.1% of all sales, the data showed. It still marked the highest monthly figure in the past 12 months.

Since June last year, the central bank has hiked interest rates by 4,150 basis points to 50% and has maintained that it will keep its monetary policy tight until inflation aligns with its targets.

Annual inflation dipped below 52% in August, compared to its peak of 75% this May. The sharp drop is expected to continue as the tightening campaign brings price relief.

Over time, interest rate hikes increase the cost of borrowing across the economy, including for mortgages, auto loans and credit cards.

Second-hand sales at 20-month high

The TurkStat data showed that the second-hand market saw a 6.3% increase in August, reaching 92,242 units, the highest since December 2022. It accounted for 68.8% of all housing sales.

First-time home sales grew by 18.7% to 41,913 properties.

From January through August, overall house sales rose 1.1% year-over-year to 806,317 units, the TurkStat said.

Mortgaged sales plunged by 50% to 76,485 units.

Sales to foreign buyers continued to decline sharply.

About 2,257 properties were sold to foreign nationals last month, a 26.2% decline compared to August last year.

In the January-August period, sales to foreigners plummeted by 40% to 15,068 units.

Separate data from the central bank showed that nominal home prices in Türkiye rose 34.3% in August compared to last year. Month-over-month, they grew by 3.6%.

However, when adjusted for inflation, prices dropped by 11.6% year-over-year, extending a series of real-term losses in property value, according to the Residential Property Price Index (RPPI).