Turkey: House sales decreases by 7.7% in May, sales to foreigners also decrease

In May, house sales decreased by 7.7% year on year to 113,726 units. Compared to the 35.6% drop in April, this indicates a slowdown in the annual rate of decline in house sales. Housing sales in April were 85,652. January-May housing sales decreased by 16.3% compared to the previous year. Despite the two-round elections in May and the ongoing effects of the earthquake, the highest monthly sales figures have been reached since December 2022.

Housing loan sales accounted for 24.3% of all sales in May. Thus, mortgaged house sales increased by 6.3% compared to the previous year and amounted to 27,476. Despite the fact that the mortgage lending conditions of the banks became difficult and the loan supply in this area decreased, the figure in mortgage sales seems to be quite positive and above expectations.

In May, foreign nationals bought 3,167 houses, down 46.9% compared to the previous year. The most foreign buyers were Russians with 991 units, followed by Iranians and Ukrainians. There was also a 60.3% decrease in foreign purchases in April. It is clearly seen that there is a decrease in the purchases of foreigners after the earthquake. While the average monthly foreign sales were 5,624 in 2022, foreigners purchased an average of 3,330 residences in the 5-month period in 2023. The share of foreigners in total house sales decreased from 4.9% in May 2022 to 2.8% in May 2023. We evaluate the decrease in sales to foreigners positively in terms of balancing supply and demand in the housing market.

The number of houses sold for the first time increased by 4.7% compared to the previous year and amounted to 34,413. First sales increased by 27.8% compared to the previous month. Second-hand house sales, on the other hand, decreased by 12.3% compared to the previous year and became 78,863.

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

The slowdown in the rate of decline in total house sales and the shift in positive growth in first-time house sales are among the positive factors observed in May. However, it is important to consider that the tightening in financing conditions in the housing market may continue to affect the contraction trend in housing sales. The increase in interest rates, especially with the perspective created by the new economy management, will have effects on markets shaped by demand, especially housing. This indicates that the overall housing market may contract in the near future, although there are some positive developments.

Kaynak Dinamik Yatırım- Enver Erkan

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