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Turkish housing prices show second greatest growth across globe

Housing prices in Turkey increased at a rate surpassed by only one other country in the world in the first quarter of 2015 compared to the same period a year ago, the Global House Price Index published recently by the real estate consultation firm Knight Frank has revealed.

Turkish housing prices rose by 18.6 percent year-on-year in Q1 of this year, the second highest behind Hong Kong, where prices increased by 18.7 percent in the same period, based on provisional data. While Ireland saw the greatest increase — 16.8 percent — after Turkey, fourth place belonged to Luxemburg, where prices surged in value by 12.1 percent. Ukraine came last, with housing prices in the country dropping by as much as 15.5 percent in the first quarter compared to Q1 of 2014. Cyprus and China followed Ukraine with declines of 8.2 percent and 6.4 percent, respectively. Turkey tops the list in Europe.

The index uses official governmental statistics or central bank data where available.

Despite the recent surge in prices, sector representatives often warn that further appreciation may occur amid unfavorable market conditions. Issuing a written statement on Monday, Mert Yıldızhan, a board member at construction firm Elit Yapı, said consumers may have to allocate a larger budget for housing expenditures due to a weakening Turkish lira against the US dollar.

Underscoring that some construction projects contain imported materials amounting to 60 or 70 percent of all their inputs, the depreciation in Turkish lira-US dollar parity — 20 percent since January — is likely to be reflected in prices as of the autumn months. “The rise in the price of construction materials will prompt sector representatives running out of stocks on hand to move to increase prices. There are several imported items in the sector including paint, plastic joints, elevators and iron,” Yıldızhan said.

In the meantime, the confidence index in the construction sector fell by 2.8 percent from 84.71 in June to 82.33 in July, the Turkish Statistics Institute (TurkStat) said on Monday. The slump stemmed from an increase in the number of managers who evaluate current overall order books as below seasonal normal and expect a decrease in total employment over the next three months. TurkStat’s indices use values ranging between 0 and 200; values below 100 indicate a pessimistic outlook while those above that point show optimism.

The Turkish economy sustained high growth rates in the last decade, but the dynamic market activity in the construction sector that fueled that growth has faltered in recent years.

Confidence in the service sector, on the other hand, rose by 1.4 percent from 99.34 to 100.69 and by 0.7 percent from 103.69 to 104.45 from June to July in the retail sector.

Keywords: Turkey , housing price , Knight Frank

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