Construction sector shows signs of recovery

ISTANBUL

A closely watched survey has showed that Türkiye’s large construction sector may be on track for recovery.

The construction activity index climbed to a 21-month high in June, according to the survey conducted by the Turkish Ready Mixed Concrete Association (THBB).

All sub-indices pointed to a recovery in the construction sector compared with last year, said the association.

The expectations index, which surpassed the 100-mark threshold in May, continued to increase last month, while the confidence index remained above the 100-mark even though it declined slightly in June from May.

“All this suggested that the activity in the construction sector, which began in May, continued well into June,” said the association, noting that the key indices rose last month despite the long Eid al-Adha holiday.

New home sales increased by 4.7 percent year-on-year in May, recalled Yavuz Işık, the president of THBB. “However, mortgage-financed home sales were down 6 percent. We anticipate that mortgage-financed sales will decline further in the upcoming period.”

Demand for housing loans will probably decline after the Central Bank hiked its policy rate, according to Işık. “This may impact the construction sector. Yet, consumers, who keep their savings in cash in foreign currencies, may again turn to houses as an investment” he commented.

Meanwhile, a report by the Turkish Statistical Institute (TÜİK) showed that the construction cost index advanced by 0.54 percent in May from the previous month. The year-on-year increase in the index slowed from 52.99 percent in April to 47.95 percent in June.

The construction materials cost index was up 0.28 percent month-on-month and 34 percent year-on-year. Labor costs increased by 1.23 percent, which brought the annual rise to 104.8 percent.