Turkish home sales revive as mortgage lending surges
Sales of homes in Turkey rose an annual 5.1 percent in August after mortgage lending jumped, raising expectations of a revival in the crisis-hit industry.
Housing sales increased to 110,538 units, the most since December, data published by the Turkish Statistical Institute on Wednesday showed. Sales also rose by 8.1 percent month-on-month from July, when they had dipped from a year earlier.
In early August, Turkey’s state-run banks slashed interest rates on mortgages to 0.99 percent per month from a previous 1.5 percent in a government-backed effort to stimulate the market. Other lenders have also reduced their rates, but not to the same degree.
Purchases via mortgages rose an annual 168 percent from August 2018 to 34,168, equivalent to 31 percent of all transactions. In July, mortgage sales totalled 13,064 units, or 13 percent of total.
The increase in home sales was confined to sales of existing housing stock - transactions increased 25 percent annually to 69,904 units. Sales of new homes dropped 18 percent to 40,634 units, the institute said.
Turkey’s housing market stuttered in late 2017 and troubles deepened in the summer of last year when a currency crisis led to a surge in inflation and interest rates. Consumer price inflation slowed to 15 percent in August from a 15-year high of 25.2 percent last October, prompting the central bank to slash interest rates.
But Turkey is saddled with a pile of new housing stock that remains unsold, particularly in the largest cities of Istanbul, Ankara and Izmir. The unsold homes have pressured the balance sheets of construction firms, causing some to go bust and others to apply to banks to restructure their debts.
Sales of homes to foreigners dropped by 6.8 percent annually to 3,604 units. Citizens of Iraq, Iran and Russia bought the most property, the institute reported.