Growth in Turkish home prices slows to 13.08% y/y in April

Growth in Turkish home prices slows to 13.08% y/y in April
By bne IntelliNews June 28, 2017

Home prices in Turkey rose 13.08% y/y in April, marking a slowdown from March’s revised 13.37% y/y hike, the central bank said on June 28.

The annual home price growth of 12.26% recorded last December was the slowest since April 2013’s 12.09%, when CPI inflation stood at 6.13%. Annual home prices growth then moved into an escalating phase across the first three months of 2017, reaching its yearly peak to date in March.

However, spirits have been dampened by the decline confirmed for April, while high CPI inflation has outpaced home prices growth across 2017 so far.

On a monthly basis, home prices in Turkey edged up 0.86% in April, following March’s revised 1.15%.

Turkey’s annual inflation rate slightly declined to 11.72% in May after hitting 11.87% in April, the highest level recorded since October 2008.

End-2017 Turkish inflation expectations edged up from 9.53% in May to 9.55% in JuneIn April, Turkey’s central bank revised up its end-year inflation expectation for 2017 to 8.5% from its previous forecast of 8%.

The World Bank is forecasting a quickening of annual inflation to 9% at the end of 2017 from last year’s 8.5% while the OECD raised its 2017 CPI inflation forecast for Turkey to 10.4% in its June Economic Outlook forecast from its previous forecast of 7.7% given last November.

Home sales in Turkey grew 6% y/y to 556,784 units in January-MayA record high 1.34mn residential units were sold in the country last year, a 4% y/y increase, with the government having stepped up efforts to boost demand to support the slowing economy. A total of 1.3mn homes were sold in Turkey in 2015. The figure was 10.6% higher than the number recorded in 2014.

The government has been trying to stimulate housing demand with a number of measures. Government officials, including Turkish President Recep Tayyip Erdogan, have, for instance, been calling on Turkey's banks to cut interest rates on home loans, while VAT levied on home sales has been reduced.

Six straight months of home sales growth was recorded in Turkey from August last year to January thanks to government efforts aimed at boosting construction demand to support the slowing economy. And it seems the government’s attempts to boost construction demand have also supported home sales growth during the first five months of 2017, although in February there was a slight break in the trend with growth edging down 0.2% y/y.

The seasonally-adjusted confidence index for the construction sector rose by 0.4% m/m to stand at 86.7 in Junefollowing a 0.8% rise in May. Despite the slight recovery in the last two months, the index value for construction confidence is still well below the 100-mark which separates optimism from pessimism.

Turkey's construction sector calendar-adjusted turnover index rose 5.3% y/y in Q1 after growing 11.4% y/y in the last quarter of 2017.

The number of building construction permits granted in Turkey declined by 15% y/y to 28,711 in Q1. Building permits data for Q1 showed that the construction industry’s appetite for launching new projects had not been fully restored as yet despite all the stimulation measures undertaken by the government.

The construction sector’s output increased by 3.7% y/y in Q1, the same pace recorded in the fourth quarter, according to the latest GDP data from national statistics institute TUIK. The growth registered in the last two quarters was the lowest growth rate registered since Q3 2015. The construction sector was once seen as one of the reliable drivers behind robust economic growth in Turkey.

Data

Dismiss