Between 2021 and 2025, global interest rates rose and remained elevated. Major global banks such as the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of England raised rates in an effort to curb inflation.
How this impacted the housing market
The increase in rates negatively affected many sectors including real estate and global housing sales declined. The rate-cutting cycle, which began under the leadership of the ECB and was later followed by nearly all central banks worldwide, still remains on the table.
Depending on the decline in inflation, central banks are expected to lower rates further, with normalisation likely to continue in the coming years. On September 17, 2025, the Federal Reserve is preparing for rate cuts.
While a reduction between 25 and 75 basis points is expected, the Fed is anticipated to maintain its commitment to tight monetary policy and continue rate cuts over the next two years. The impact of such a rate-cutting cycle on housing prices during a period of inflation normalisation remains a key topic of debate.
Falling rates to revive real estate demand
When the Fed began raising interest rates, housing prices around the world entered an upward trend, while high financing costs helped stabilise them. A global reduction in rates could trigger the opposite effect.
Falling rates may revive the demand that has been suppressed over the past three years and put upward pressure on housing prices. In particular, potential price increases in the U.S. housing market could trigger global housing inflation.
Compared to previous periods, such a phase could limit access to housing, while low interest rates may contribute to even higher prices. For this reason, the Fed’s return to rate cuts will significantly affect the real estate sector.
Turkey’s Central Bank expected to lower interest rates
In line with this, the Central Bank of the Republic of Turkey (CBRT) is also expected to follow the Fed and the ECB by continuing to lower interest rates. A similar impact on Turkey’s housing market, as seen in the U.S., may occur, with record-breaking sales likely to reflect in prices.
With global rates declining, foreign investors may increase their investments in Turkey. Looking at the past decade, investments in Turkey have particularly concentrated on the real estate sector. Investors from countries such as Germany, Russia, the United Kingdom, France, Iran, and Pakistan have preferred Turkey, with nearly 400,000 housing units purchased by foreign buyers.
Essentially, the Fed’s rate cuts represent a development that will positively impact the housing sector in terms of both prices and sales volume. Investments are also expected to increase alongside falling interest rates, leading to greater capital inflows.
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