Turkish housing sales rise after rate reduction

ANKARA

The Central Bank’s gradual rate reduction has put the brakes on a decrease in Turkish residential sales in June, reviving people’s mortgage appetite.

Housing sales in Turkey have been suffering since the beginning of the year after high interest rates and a weak Turkish Lira curbed demand in the market.

According to figures announced by the Turkish Statistical Institute (TurkStat) on July 23, the number of houses sold in Turkey dropped by 7.8 percent to 524,776 for the first six months of the year compared to the same month last year.

Despite pointing to a decrease in the first half of the year, the figures from the Central Bank also revealed that the downfall had been reduced due to a recovery in loan purchases.

As the sales in June dropped by only 3.6 percent year-on-year, the total decrease in sales, which was 8.6 percent for the first five months, retreated to 7.8 percent.

Analysts argue the slight pick-up in May has been fuelled by the Bank’s rate reduction.

The Bank cut its benchmark interest rate, which is used by commercial banks for short-term funding, from 10 percent to 8.2 percent, by lowering the rate for three months in a row.

Even though analysts expect sales to stall during the summer months amid the impact brought by Ramadan and the upcoming presidential elections in early August, they hope the market will revive itself in September.