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Deciding whether to buy Turkish property in lira or dollars is crucial for foreign investors in 2025.
The Turkish lira has depreciated over 21% against the dollar in the past year, with inflation running at 33% and significant currency volatility continuing. With the current exchange rate at approximately 41.26 lira per dollar, foreign property buyers face important decisions about currency exposure that will directly impact their investment returns and long-term financial security.
If you want to go deeper, you can check our pack of documents related to the real estate market in Turkey, based on reliable facts and data, not opinions or rumors.
Dollar-denominated property purchases offer better protection against Turkish lira devaluation for foreign investors.
While lira purchases may seem cheaper initially, the currency's 21% decline and 33% inflation rate create significant long-term risks.
| Currency Option | Current Advantages | Long-term Risks |
|---|---|---|
| Turkish Lira | Lower initial purchase prices, potential property discounts | 33% inflation, 21% currency depreciation, political volatility |
| US Dollar | Currency stability, inflation protection, easier exit strategy | Higher initial costs, limited local financing options |
| Exchange Rate Impact | 1 USD = 41.26 TRY (September 2025) | Continued lira weakness expected through 2027 |
| Interest Rates | Turkey: 43% vs US: ~5% | High Turkish rates indicate economic instability |
| Investment Protection | Dollar holdings preserve purchasing power | Lira exposure increases devaluation risk |
| Government Forecast | Inflation expected to reach single digits by 2027 | Political instability may derail economic plans |
| Property Market Impact | Foreign currency restrictions minimal | Currency controls could tighten during crises |
Fact-checked and reviewed by our local expert
Laurence Rapp 🇬🇧
Sales representative at Spot Blue - International Real Estate Agency
What is the current exchange rate between the Turkish lira and the US dollar?
As of September 2025, the exchange rate stands at approximately 41.26 Turkish lira per US dollar.
This means one US dollar buys 41.26 Turkish lira, while one Turkish lira equals about 0.0242 US dollars. The rate fluctuates daily due to market conditions, but this represents the general trading range for September 2025.
For Turkish property investors, this exchange rate is crucial because it determines how much purchasing power foreign currency holds in the Turkish real estate market. A weaker lira means foreign buyers get more property value for their dollars, but it also signals underlying economic instability that could affect long-term investment returns.
The current rate reflects significant lira weakness compared to historical levels, making Turkish properties appear more affordable to foreign buyers but raising questions about currency stability for long-term investments.
It's something we develop in our Turkey property pack.
How has the Turkish lira performed against the dollar over the past year?
The Turkish lira has depreciated approximately 21% against the US dollar over the past 12 months, hitting successive record lows.
This substantial decline means that properties purchased in lira a year ago have lost significant value when measured in dollar terms. The depreciation has been consistent rather than sudden, reflecting ongoing structural economic challenges rather than temporary market volatility.
Monthly performance shows continued weakness, with the lira declining roughly 1.8% in the most recent month alone. This steady erosion demonstrates persistent downward pressure on the currency that affects all lira-denominated assets, including Turkish real estate.
For property investors, this 21% decline illustrates the substantial currency risk involved in holding Turkish assets. A property worth $100,000 in lira terms a year ago would now be worth approximately $79,000 due to currency movement alone, regardless of property market performance.
What is Turkey's inflation rate and how does it affect the lira's value?
Turkey's annual inflation rate reached 32.95% in August 2025, down from recent peaks above 35% but still extremely high by global standards.
This high inflation directly erodes the purchasing power of the Turkish lira, making each lira worth less in real terms over time. When inflation runs at 33%, money loses one-third of its purchasing power annually, which explains the persistent pressure on the currency against stable foreign currencies like the dollar.
High inflation also creates uncertainty in the Turkish property market, as construction costs, maintenance expenses, and property taxes all increase rapidly. This inflation dynamic makes lira-denominated property investments particularly risky for foreign buyers seeking stable long-term returns.
The Turkish government forecasts inflation will gradually decrease to single digits by 2027, but this projection faces significant uncertainty given current political and economic challenges.
Are there significant political or economic events in Turkey that could impact the lira?
Recent political tensions including legal actions against opposition leaders and protests in Istanbul have increased currency risk and market volatility.
These political developments create uncertainty about Turkey's future economic policies and governance stability, which directly affects investor confidence in the lira. Political instability typically leads to capital flight as investors seek safer assets in more stable currencies.
| Event Type | Impact on Lira | Property Market Effect |
|---|---|---|
| Opposition legal actions | Increased volatility | Foreign buyer hesitation |
| Istanbul protests | Currency weakness | Reduced investor confidence |
| Central bank policy changes | Rate uncertainty | Financing cost fluctuations |
| Electoral concerns | Political risk premium | Capital flight risk |
| Economic reform delays | Credibility damage | International investor withdrawal |
| Regional conflicts | Safe haven outflows | Tourism and foreign investment decline |
| EU relationship tensions | Trade uncertainty | European buyer reduction |
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What are interest rates in Turkey and how do they compare to dollar economies?
Turkey's central bank interest rate currently stands at 43% after a recent cut from 46% in July 2025.
This extraordinarily high rate contrasts sharply with US Federal Reserve rates, which remain around 5%. The massive differential reflects Turkey's struggle with inflation and currency stability, requiring extremely high rates to maintain any monetary control.
For property buyers, these high Turkish interest rates make lira financing extremely expensive. A mortgage at 43% interest makes property purchases prohibitively costly for most buyers, pushing the market toward cash transactions or foreign currency financing where available.
The central bank has signaled further rate reductions by year-end as inflation moderates, but rates are expected to remain well above global norms for the foreseeable future, maintaining pressure on the lira and property financing costs.
What is the future outlook for the Turkish economy?
Official forecasts expect gradual disinflation with a return to single-digit inflation by 2027 and economic growth of 3-5% in coming years.
However, external risks including high inflation persistence, large current account deficits, and sensitivity to global risk sentiment create significant uncertainty around these projections. The Turkish economy remains vulnerable to external shocks and political developments that could derail recovery plans.
For property investors, the economic outlook suggests continued volatility in the near term with potential stabilization only by 2027 if government policies succeed. This timeline indicates that lira-based investments face at least two more years of significant currency and inflation risk.
Currency depreciation is expected to continue until inflation is brought under control and political stability improves, making dollar-denominated investments more attractive for foreign buyers seeking predictable returns.
How stable is the Turkish government and its monetary policy?
The Turkish central bank has experienced frequent leadership changes and political interventions that have significantly damaged confidence in monetary policy consistency.
While the bank signals continued tight monetary policy until price stability is achieved, past political interference in central bank decisions has created persistent skepticism about policy predictability and effectiveness among international investors.
Ongoing currency depreciation reflects this lack of confidence in Turkish monetary policy institutions. For property buyers, this institutional weakness suggests continued volatility in interest rates, inflation, and currency values that could significantly impact investment returns.
The combination of political pressure on the central bank and economic policy unpredictability makes lira-denominated property investments particularly risky for foreign buyers who cannot easily predict or hedge against policy changes.
It's something we develop in our Turkey property pack.
Are there restrictions or taxes on foreign currency in Turkey?
Turkey imposes no limits on bringing foreign currency or lira into the country for property purchases.
However, taking more than the equivalent of $5,000 in currency out of Turkey requires proper documentation and must typically be done through bank transfers rather than cash. This regulation affects exit strategies for property investors who may want to repatriate sale proceeds.
- Currency import: Unlimited amounts allowed for legitimate property transactions
- Currency export: Amounts over $5,000 require bank documentation
- Property transactions: Can be conducted in foreign currencies with proper reporting
- Tax implications: Currency-protected deposits may offer some tax exemptions for corporations
- Banking requirements: Foreign currency transactions must be reported to Turkish banking authorities
- Documentation needs: All large currency movements require proof of legitimate source and purpose
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How easy is it to convert dollars to lira in Turkey and what are the fees?
Converting dollars to lira in Turkey is straightforward through banks, exchange offices, and ATMs throughout the country.
Conversion rates and fees vary by provider, typically ranging from 1-2% above the mid-market rate. Major banks and transfer services offer competitive rates with transparent fee structures, and comparison tools are widely available to find the best conversion rates.
For large property transactions, banks generally provide better rates than exchange offices, especially for amounts exceeding $10,000. Many banks offer preferential rates for property buyers who maintain accounts with them, potentially reducing conversion costs.
ATM withdrawals are convenient for smaller amounts but typically carry higher fees and less favorable exchange rates compared to bank transactions. Property buyers should plan currency conversion through established banks to minimize costs and ensure proper transaction documentation.
Are there better investment opportunities in Turkey when paying in lira versus dollars?
Dollar-denominated investments generally offer better protection against currency devaluation and inflation for foreign buyers in Turkey.
While lira-denominated investments like local real estate and securities can benefit from higher nominal returns, they remain exposed to significant currency risk and inflation volatility that often erodes real returns. The 21% lira depreciation demonstrates how currency losses can quickly overwhelm investment gains.
Turkish properties priced in dollars or euro provide more stability for foreign investors, serving as a hedge against lira devaluation. Many premium properties in Istanbul, Antalya, and other major cities are now priced in foreign currencies to attract international buyers.
On balance, dollar-based investments preserve value more effectively over time unless Turkey achieves substantial currency stabilization, which current forecasts suggest is unlikely before 2027 at the earliest.
Will buying in lira offer more favorable long-term prices than buying in dollars?
Lira-denominated purchases may provide initial discounts due to currency weakness, but long-term price advantages are unlikely given Turkey's economic outlook.
The apparent discount from buying in lira often proves illusory when factoring in continued currency depreciation and high inflation. A property that costs 20% less in lira terms today may lose 25% or more in dollar value over two years due to currency movements.
| Time Period | Lira Purchase Scenario | Dollar Purchase Scenario |
|---|---|---|
| Year 1 | Initial 15% discount, 20% currency loss | Stable value, no currency risk |
| Year 2 | Continued depreciation, inflation impact | Maintained purchasing power |
| Year 3 | Cumulative 35-40% value loss possible | Protected from currency volatility |
| Exit strategy | Complex currency conversion, timing risk | Straightforward sale process |
| Net outcome | Higher risk, potential significant losses | Stable investment, preserved value |
What are the potential risks of holding large amounts of lira in Turkey?
Holding substantial lira balances exposes investors to chronic devaluation and high inflation, with additional liquidity risks during periods of extreme volatility.
The primary risk is continued currency depreciation, which has averaged over 20% annually in recent years. Large lira holdings also face inflation risk that erodes purchasing power even when currency rates remain stable.
While Turkish banking facilities generally offer good liquidity under normal conditions, policy shifts or political turmoil can disrupt financial markets and limit access to funds. During currency crises, banks may face capital controls or restrictions that affect large transactions.
Currency controls could tighten in response to future economic crises, although no drastic restrictions are currently in place. For property investors, this means exit strategies involving large lira amounts could face unexpected regulatory hurdles during market stress periods.
It's something we develop in our Turkey property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
The evidence strongly favors dollar-denominated property purchases for foreign investors in Turkey's current economic environment.
While lira purchases may appear cheaper initially, the combination of 33% inflation, 21% currency depreciation, and ongoing political uncertainty creates substantial risks that typically outweigh any initial cost savings for international buyers seeking stable long-term investments.