First half construction data worrisome, says association

ISTANBUL - Anatolia News Agency

The slowing economy hit the construction industry most, says a local association. DAILY NEWS photo, Hasan ALTINIŞIK

The downturn risks signaled by Turkey’s construction industry in the first half of the year are mainly due to a slowdown in the volume of loans, according to a report issued yesterday by the Real Estate Investment Trust Association (GYODER) for the second quarter of the year. The trend was revealed by an official report saying that turnover in the industry had dropped in the second quarter.

Primarily, efforts to slow down the economy during the first half of the year have hit the construction industry the hardest, said GYODER President Işık Gökkaya, according to the report.

“Growth in the construction industry in Turkey came to a halt in the second quarter. The construction industry has been affected by efforts to slow the economy down. In particular, private sector expenditure in the second quarter declined. The slowdown in demand and a peculiarity in the value added tax regulations for residences created a dip in home constructions. In particular, home sales and the low volume of loans signal a slowdown in the housing industry in the second quarter,” he said.

The volume of home loans increased just 5 percent in the second quarter, indicating a slowdown limiting demand for housing. The home loan interest rate surpassed the 1 percent threshold, hitting 1.21 percent.

The volume of new home loans was 4.8 billion Turkish Liras in the first quarter. While the figure increased to 6.8 billion liras in the second quarter, it recorded a 3 percent drop year-on-year.

The figures give a number of serious messages, according to Gökkaya. The real estate sector will not achieve its growth target of 4 percent this year if the interest rates do not fall bellow 1 percent, he said.

However, construction and utilization permits doubled in the second quarter compared with the previous quarter, shooting up by 37 percent compared to the same period last year, which is a positive sign for new home constructions. Building utilization permits increased, posting a 19 percent increase in quarterly period comparison.The number of home sales was up 10.4 percent in the second quarter from the first quarter, surpassing 106,000 items. However, home sales are still lagging behind the levels seen in the buoyant second and fourth quarters last year - 107,308 and 106,035 respectively.

Turnover falls by 1.2 pct
The quarterly turnover index in construction decreased by 1.2 percent year-on-year in the second quarter of 2012 compared to the same quarter of the previous year, the Turkish Statistical Institute (TÜİK) said. The turnover in building construction decreased 3.8 percent, while the figure in civil engineering was up by 2.4 percent in the same compared quarter.