Homes sales in Turkey rose by 3% y/y to 119,655 units in May following the annual declines that were posted in the previous three months, national statistics office TUIK reported on June 20.
Mortgage sales continued to decline, on the contrary, but at a lower pace of 12% y/y to 36,865 contracts. Mortagage sales were down 36% y/y in April, 35% y/y in March, 28% y/y in February and 20% y/y in January.
President Recep Tayyip Erdogan has not let up in pushing for lower interest rates despite Turkey's economy entering territory where analysts suspect it is seriously overheating. However, sticky double-digit inflation and a lack of cash at local lenders following last year’s credit boom have prevented the central bank and the banking industry from responding to Erdogan's calls for cheaper money.
Consequently, home sales declined by 5% y/y to 526,619 units in January-May while mortgage sales fell by 27% y/y to 154,157 contracts.
Home sales to foreigners rose by 27% y/y to 9,756 units in the first five months.
Annual home price growth in Turkey edged up from 9.48% in March, - the lowest level recorded since March 2011 - to 10.06% in April, data from the central bank showed on June 19. That still trailed inflation. The posted growth rate fell below the annual CPI inflation rate last September and stayed there in the subsequent eight months.
Turkey’s annual consumer price inflation jumped from 10.85% in April to 12.15% in May, taking the rate up to the highest level recorded since last November’s 12.98%, the Turkish Statistical Institute (TUIK) announced on June 4.
Expectations for Turkey's end-2018 inflation rate rose to 12.28% in June from 11.07% in May, the central bank’s regular survey of businesses and analysts showed on June 11.
The seasonally-adjusted construction confidence index decreased by 2.1% m/m to 77.2 in May. The index rose to 87 in January and then posted declines in the following four months in a row.
The government has tried to stimulate home sales prior to the June 24 snap elections. There are a total of 1.5mn-2mn unsold homes in Turkey, according to sector representatives.
Reuters reported earlier last month that payment problems and a slowdown in new projects have beset the Turkish construction firms that have driven the country’s stellar economic growth for years.
“Exposures to the construction and energy sectors and high borrower concentrations are also significant sources of risks at many banks,” Fitch Ratings said on June 1 when it placed 25 Turkish banks and their subsidiaries’ Long-Term Foreign-Currency (FC) Issuer Default Ratings (IDRs) and Viability Ratings (VRs) on Rating Watch Negative (RWN).
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.