Thanks to a new law passed by the Turkish parliament last week, the property market is set to receive a huge shot in the arm, writes Sue Kelbrick.

Dubbed the 'Mortgage Law' and due to come into effect on January 1, 2008, the legislation paves the way for people in Turkey to take out mortgages for the first time.

Until now people have had to rely on family borrowings or expensive short-term non-mortgage loans from banks.

With a very strong ownership culture, the ratio of home loans to national revenue is forecast to rise from 4.5% to 12% by 2015, as a result of the Mortgage Law.

The legislation is being seen as one of the biggest reforms in the Turkish financial system ever and is highly likely to kick start the Turkish property market as demand is set to go through the roof. Prices are likely to follow suit.

Property prices have already shown healthy increases in the last few years with hikes of between 25 and 40 per cent recorded between 2005 and 2006. This upward trend is predicted to continue in the next few years with predictions of price rises of as much as 50 per cent a year.

Demand for affordable property is at its highest level ever, with an estimated need for seven million homes over the next 10 years.

Where does this demand come from? Turkey has a huge population of around 70 million and a healthy 2 per cent annual population growth.