Homes sales in Turkey declined by 10% y/y to 103,087 in April, after declining 14% y/y in March and by 5% y/y in February, national statistics office TUIK reported on May 18.
A further sharp decline in mortgage sales was also recorded, with sales down 36% y/y in the month to 27,912. Mortgage sales fell 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 8% y/y to 406,964 units in January-April while mortgage sales fell by 30% y/y to 117,292 units.
Home sales to foreigners rose by 25% y/y to 7,341 units in the first four months.
Annual home price growth in Turkey decelerated to 9.48% in March, the lowest level recorded since March 2011, data from the central bank showed on May 17.
Posted growth in home prices fell below annual CPI inflation last September and subsequently stayed lower than the inflation indicator in the following seven months.
Turkey’s annual consumer price inflation rose to 10.85% in April, the highest level recorded this year, from 10.23% in March. Expectations for inflation ahead are climbing.
The Turkish government has been trying 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 this month that payment problems and a slowdown in new projects were besetting Turkey’s construction firms, which have driven the country’s stellar economic growth for years.
Construction contributed 0.7pp to last year’s 7.4% GDP growth.
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 units in 2017.
Property sales to foreigners increased 22% y/y to 22,234 units last year.