Inflation Fears Reshape Turkish Household Portfolios: Gold Reclaims the Throne from Real Estate

The Central Bank of the Republic of Turkey's (CBRT) August Household Expectation Survey reveals a significant shift in household portfolios driven by persistent inflationary pressures and evolving investment appetites. According to the survey conducted with 3,335 participants, the 12-month ahead annual inflation expectation rose by 0.64 percentage points to 45.58%. This upward trend underscores deteriorating pricing behavior among consumers, forcing a redistribution of assets in investment preferences.

Food and Energy Dominate the Inflationary Horizon

Two primary categories continue to dominate consumers' perception of past price increases and future expectations:

■While the share of participants identifying food as the fastest-rising category fell slightly to 39.3%, it remains the most substantial threat to household budgets.

■Fuel and energy stand out as the other critical sectors where participants expect the highest price increases in the coming period.

■The USD/TRY exchange rate expectation for the next 12 months registered a notable increase of 1.49 liras, climbing to 54.47.

Real Estate Loses Ground as Gold Emerges as the Safe Haven

High interest rates and restricted access to mortgage loans are triggering a structural shift in the preferences of Turkish households, who have traditionally favored brick-and-mortar investments:

■The expectation for housing price growth over the next 12 months decreased by 0.36 percentage points, falling to 32.13%.

■The proportion of participants choosing "I will buy gold" as their primary investment rose by 1 percentage point to 41.3%, taking the lead.

■Conversely, those opting for "I will buy a house/shop/land" declined by 1.4 percentage points to 37.1%, indicating that real estate has lost its status as the top investment choice.

The liquidity squeeze and the search for alternative yields that we have long observed in the real estate market are now reflected as concrete data in household sentiment. With housing price growth expectations at 32.13%—well below the expected inflation of 45.58%—the perception that real estate will lose value in real terms is gaining traction. High deposit rates and tight credit conditions are stripping housing of its investment appeal, reducing it merely to a basic shelter need. In this environment, it is no surprise that gold has reclaimed its throne, bolstered also by global geopolitical risks. For real estate developers, the era of "build and sell" is officially over; the era of "design alternative financial models and sell" has begun.