Turkey: Housing prices increase by 189.19% year-on-year in September

According to CBRT data; HPI, which increased by 4.9% in September 2022 compared to the previous month, increased by 189.2% in nominal terms and by 58% in real terms compared to the same month of the previous year. When the developments in the housing price indices of Istanbul, Ankara and Izmir are evaluated, an increase of 4.6%, 4.3% and 5.8% was observed in September 2022, respectively, compared to the previous month. Index values increased by 212.1%, 196% and 185.8% in Istanbul, Ankara and İzmir, respectively, compared to the same month of the previous year.

Housing price index (annual % change) Source: CBRT, TURKSTAT, Tera Yatırım

In the acceleration of the increase in housing prices, we observe the effects of the increase in construction costs and the supply-demand balance, together with the factors coming from the exchange rate and inflation. Especially after the Covid-19 pandemic, changes in housing supply and demand affect prices through financing costs and household demand. In the next phase, nominal prices increased significantly in many regions with exchange rate volatility. The effects of the global inflation created by the Ukraine war and especially the demand effects from the Russians created serious asymmetry in the direction of housing prices. The fact that very high figures exceed the purchasing power and drive prices above reachable levels may cause a contraction in demand, especially on credit sales. When the social housing project is implemented, it will affect housing and rent prices for low-income people, but the rate of price increase is more likely to slow down than to reduce prices in general.

While changes in housing supply and demand, especially after the Covid-19 pandemic, affected prices through financing costs and household demand, nominal prices increased significantly in many regions with the volatility in exchange rates in the next stage. With GDP growing by 7.6% in 2Q22, the construction sector contracted and construction costs increased by 119.83% as of September 2022. As of 2022, the effects of global inflation created by the Russia-Ukraine war and especially the effects from the Russian demand have created serious asymmetry in the direction of housing prices.

The increase in TL-based loan interest rates caused housing demand to stagnate due to the increase in loan costs in the long run while trying to stabilize the exchange rate. We will continue to monitor private banks' exchange rate risks and cost management for the impact of mortgage-induced sales.

Kaynak: Tera Yatırım-Enver Erkan
Hibya Haber Ajansı