Turkish home price growth flat at 13.34% y/y in March

Turkish home price growth flat at 13.34% y/y in March
By bne IntelliNews May 30, 2017

Home prices in Turkey rose 13.34% y/y in March, meaning there was almost no change from February's 13.33% y/y hike, the central bank said on May 29.

The annual home price growth of 12.26% recorded in December was the slowest since April 2013’s 12.09%, when CPI inflation stood at 6.13%. Growth moved into an escalating phase across the first three months of 2017, but the escalation in the CPI meant inflation outpaced home prices during the first quarter.

On a monthly basis, home prices in Turkey edged up 1.12% in March, following February's 1.1%.

Turkey’s annual inflation rate in April hit 11.87%, following the 11.29% seen in March. Last month, 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.

Home sales in Turkey grew 7% y/y to 440,226 units in January-April. A 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 house 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 third of this year, 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 0.8% m/m in May, following a 0.2% decline in April. Despite the slight recovery in May, the index value for construction confidence is still well below the 100-mark.

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

The number of building permits rose by 6% y/y to 132,458 in 2016.

The construction industry expanded by 3.7% y/y in Q4, the lowest growth rate registered since Q3 2015, according to the latest GDP data from TUIK. It expanded 7.2% y/y in 2016, following relatively limited 4.9% y/y growth in 2015. The construction sector was once seen as one of the reliable drivers behind robust economic growth in Turkey.