Turkey property prices extend drop even as demand increases

Property prices in Turkey extended their drop in November even as demand for homes increased, central bank data showed.

Prices fell by a monthly 3.1 percent when taking account of the erosive effects of inflation, the central bank said in a report on Friday.

The cost of homes climbed by 7.2 percent when excluding inflation, with the price of housing in Istanbul, suffering from a glut in supply, edging up 1.3 percent.

Turkey’s property market has entered a severe slump after a currency crisis in the summer of 2018 sent consumer demand tumbling. But a campaign led by state-run banks to lower the cost of mortgages is helping to revive sales.

Sales of homes in Turkey surged by an annual 54 percent in November in a third month of gains spurred on by lower interest rates and declining prices. Sales of apartments and houses increased to 138,372 units during the month. Turks had bought just 89,626 homes in November 2018, a figure that marked the bottom of a dip in sales that year caused by the currency crisis.

The central bank data published on Thursday suggests that building firms are being forced to curb price increases or offer discounts to offload excess housing stock. The companies have led a surge in bankruptcies across the country after they borrowed in foreign currency and failed to sell the homes they built.

Demand for new homes in Turkey is also being helped by a stable lira. The currency's value has remained little changed in recent months after losing 28 percent against the dollar in 2018. Losses for last year totalled around 12 percent.