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, statistics institute TUIK said on June 16.
On a calendar and seasonally-adjusted basis, turnover contracted by 1.2% q/q in the first quarter after registering a 6% q/q rise in the previous quarter.
Annual average calendar-adjusted turnover growth in Turkey's construction industry jumped to 10.8% y/y in 2016 from only 0.5% y/y in 2015.
TUIK also previously published the construction production index together with the turnover index. However, the “construction production index published with the 2010 base year since 2013 cannot be maintained anymore due to the lack of continuity in the data source,” the statistics institute said on June 16. TUIK plans to publish a new series with the base year of 2015 starting from 2018.
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.
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 permit 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 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 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.
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 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.
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 rose from 9.53% in May to 9.55% in June. In 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.