Homes sales in Turkey rose by 7% y/y to 123,878 units in July following on from the 22% y/y growth registered in June, national statistics office TUIK reported on August 15.

Mortgage sales declined by 21% y/y to 30,405 in the seventh month following a 35% y/y jump in June that marked the first annual increase recorded in 2018.

Consequently, home sales declined by 0.04% y/y to 769,910 units in January-July while mortgage sales fell by 18% y/y to 232,210 contracts. 

Home sales to foreigners rose by 30% y/y to 14,674 units in the first seven months.

TUIK said in a separate data release on August 15 that the number of buildings granted construction permits fell by 28% y/y to 55,231 in H1 while the number of permitted dwelling units fell at a sharper 46% y/y to 349,985.

The government tried to stimulate home sales prior to the June 24 snap elections. Re-elected President Recep Tayyip Erdogan has shown no let-up in pushing for lower interest rates despite Turkey's economic meltdown.

There are a total of 1.5mn-2mn unsold homes in Turkey, according to sector representatives.

Annual home price growth in Turkey edged up from 10.12% in April to 10.59% in May, according to the latest data from the central bank. The posted growth rate fell below the annual CPI inflation rate last September and stayed there in the subsequent recorded ninth months. 

The seasonally-adjusted construction confidence index increased by 2.4% m/m to 77.1 in July. The index rose to 87 in January and then also posted declines in the following six months in a row.

Expected tightening in monetary and fiscal policies would weigh more on the construction industry which has already begun to show signs of a slowdown, the Contractors’ Association of Turkey (TMB) said on August 1 in its regular sectoral analysis report.

IMF estimates suggest that a significant share of domestic lending in FX has been to companies in the construction, real estate and energy sectors, whose incomes are presumably TRY-denominated as against their input costs which are FX-denominated.

Hakan Caglar, chairman of construction company Emay Insaat, told Bloomberg on August 1 that the company was in debt restructuring talks with lenders. Emay’s total debt was TRY1.2bn as of 2017 and the total value of its stock assets stood at TRY2bn, according to Caglar.

Ali Agaoglu, chairman of one of Turkey’s largest construction companies Agaoglu Group, on August 7 was quoted by Hurriyet Daily News as denying rumours that the company would file for bankruptcy. Agaoglu also said that the conglomerate was expecting $300mn from the sale of its two wind power plants.

The construction industry grew by 6.9% in Q1, a higher rate than the 5.8% seen in Q4 2017, according to the latest GDP data. Construction contributed 0.7pp to last year’s 7.4% GDP growth.

Homes sales rose by 5% y/y to 1.41mn units in 2017, marking a new all-time high, following the 4% y/y gain in 2016 to 1.34mn units.

Mortgage sales rose by 5% y/y to 473,099 contracts in 2017.

Property sales to foreigners increased 22% y/y to 22,234 units last year.