Turkish property prices slide 12.1 percent in real terms

Residential property prices in Turkey slid 12.1 percent in June from a year earlier, when including the erosive effects of inflation on an asset’s value, the central bank said.

Prices rose an annual 1.72 percent across the country in nominal terms, in other words before inflation was factored in, the central bank said on its website on Thursday.

Turkey’s property market has entered a slump, exacerbated by a currency crisis that peaked in August last year and pushed the economy into a painful downturn. The government is trying to stimulate demand for housing with tax breaks and low-cost loans from state-run banks. A glut in the supply of new dwellings is weighing heavily on the market.

Prices in Istanbul, the biggest market for the building industry, fell a nominal 2.29 percent, the central bank said in the monthly report. They dropped 0.73 percent in the capital Ankara but rose 0.3 percent in Izmir, Turkey’s third-largest city.

Inflation in Turkey stood at 15.7 percent in June. It accelerated to 16.7 percent in July.

State-run banks Ziraat Bank, Halkbank and Vakifbank announced at the beginning of August that they were slashing mortgage rates to 0.99 percent monthly from a previous 1.49 percent. Construction companies are also making financial offers to help offload a growing pile of unsold properties.