Turkey’s home price growth at below inflation for eighth straight month

Turkey’s home price growth at below inflation for eighth straight month
By bne IntelliNews June 19, 2018

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.

The posted growth rate fell below the annual CPI inflation rate last September and has 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 Maythe 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 Turkish 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.

Home sales in Turkey declined by 8% y/y to 406,964 units in January-April while mortgage sales fell by 30% y/y to 117,292 units.

Reuters reported in April that payment problems and a slowdown in new projects were besetting Turkey’s construction firms, which have very much 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).

The construction industry grew by 6.9% in Q1, higher 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 in Turkey 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.

 

 

Data

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