Written by Prof. Dr. Ali Türel and Prof. Dr. Leyla Alkan Gökler, EECFA Türkiye
In H1 2026 Türkiye saw construction costs go up, which is biting into private housebuilders’ profit margins, while house price growth decelerated in real terms. Permit numbers also grew in the first half of the year thanks to the public housing schemes of the government. However, Q2 2026 was already weaker in building permits and construction production, so it remains to be seen whether these public programs will keep residential construction strong.
H1 2026 statistics: construction costs, house prices, building permits
According to the statistics gathered and published by the Turkish Statistical Institute (TurkStat), a comparison of the monthly rates of change in the Consumer Price Index (CPI) and the Construction Cost Index (CCI) for residential buildings shows that construction costs increased at a slower pace than inflation in 2025. In January 2026, however, CCI recorded a considerable increase, while during the remainder of the first half of the year it generally continued to rise at a higher pace than inflation.
A comparison of the monthly rates of change in the Consumer Price Index (CPI) with the House Price Index (HPI) for 2026, published by the Central Bank of Türkiye, indicates that house prices also increased at a slower rate than inflation through June. Looking at the cumulative changes in these three indicators during H1 2026, CPI added 17.76% in June compared to December 2025, while HPI rose by 13.20% and CCI by 20.07%. These figures indicate that house prices grew at a slower pace than inflation during H1 2026, implying a decline in house prices in real terms. In particular, following the sharp increase in the building construction cost index in January 2026 over the rate of increase in house prices, this would inevitably cause a significant decline in profit margins for housing producers.
The number of dwelling units granted building permits reached 513,731 in H1 2026, indicating that construction permits were issued for 35,071 more dwelling units than in H1 2025. In terms of completed dwellings, occupancy permits were issued for 306,687 residential units during H1 2026, representing an increase of 28,990 units compared with the same period of 2025.
Public housing programs
Over the past three years the number of dwelling units granted building permits posted a massive growth, exceeding one million units in 2025, one of the main reasons being the rapid housing reconstruction program undertaken or financed by the government following the major earthquakes of 2023. By the end of 2025, the construction of as many as 455,000 urban and rural housing units, the majority of the post-earthquake housing units to be built, had been completed and delivered to legal beneficiaries.
The Housing Development Administration (HDA, the central government institution) has also been preparing a new social housing program with the intention of providing quake-resistant, low-cost housing with affordable prices, comprising 500,000 housing units since October 2025. Therefore, despite rising construction costs, housing construction continues at a relatively strong pace, with publicly developed housing accounting for a substantial share of building permits. Rise in the building construction cost index at a higher rate can also be related to the effects of the new social housing program of the HDA, and the remaining works of the reconstruction program of earthquake-damaged housing.
Construction output
Despite the increase in building permits during H1 2026, this momentum has struggled to translate into actual construction output. Calendar-adjusted Construction Production Index declined by 3.1% year-on-year in May and by 6% in June. These falls may be linked to the nearing completion of earthquake reconstructions, as well as the 9.5% fall in housing permits in Q2 2026, although completions have continued to grow since Q2 2025, most likely under the effects of the completed reconstruction of the remaining earthquake-damaged housing.
With house price increases remaining below the rise in construction costs, the slowdown in construction output suggests that increasing cost pressures and narrowing profit margins are constraining the pace of the private sector’s housebuilding activity. Housing demand is also negatively affected by high interest rates as mortgage credits could be used in only 22% of housing transactions in 2026.
Residential market forecast for Türkiye up to 2028 is available in the EECFA Forecast Report Türkiye. For sample report or orders, contact us.
