Turkey: Housing and mortgage sales continue to decline

In October, house sales decreased by 25.3% year-on-year to 102 thousand 660 units and carried its decline to the fourth month. Mortgage sales, which fell to 13,268 in October 2022, were down 52.7% from 28,049 units in October 2021. The most important reasons for this are the difficulty of accessing housing loans, the very high prices and the high share of sales with housing loans in housing. The share of mortgaged sales in total sales is 12.9%.

Initial sales fell 22% year-on-year to 32,692 units, compared to September's 13.1% drop. We see that the decrease in the number of newly built houses was effective in the deepening of the decline in the first sales. Used sales were down 26.73% year-on-year, compared to September's 18.79% drop.

Foreign nationals bought 5,377 homes in October, down 8.8% year-on-year. Russian citizens bought 2,023 houses, followed by Iranian and Iraqi citizens. The share of house sales to foreigners in total house sales in October was 5.2%. This rate was only around 2.5% two years ago. The effect here is due to the interest of Ukrainian and Russian citizens in purchasing real estate in Turkey.

First Hand House Sales (y/y change) Source: TurkStat, Tera Yatırım

Quantitative decline in sales was expected in October. January-October house sales, on the other hand, increased by 6.7% year on year to 1.16 million units. When we look at the year in general, we observe that there is no significant decrease compared to January-October 2021. The main factor in this is the rising inflation and the depreciation of TL in the previous months, keeping the demand for housing investment alive, but in recent months, very high prices and difficulties in accessing finance have made it difficult to access housing. According to the CBRT data, the current weighted average of housing loan interest rates is 21.56%. Due to the 17-18% interest rates in the summer months, at the beginning of the year and at this time of the last year, a tightening of financial conditions is striking and this affects the local housing demand downwards.

As a result; There is a constantly rising inflation with the depreciating TL, and there was an increasing demand for real estate investment. However, in recent months, extremely high prices and high interest rates due to macroeconomic imbalances make access to housing difficult and demand has been driven by foreigners in recent months. For this reason, there may be an expectation of a slowdown in the housing market.

Kaynak: Tera Yatırım-Enver Erkan
Hibya Haber Ajansı