Hints by the Central Bank of Turkey (CBRT) about rate cuts as early as December, the Trump effect and public’s inflation perceptions running at twice the forecast expressed by CBRT’s own Market Participants Survey of November, triggered a reshuffling of savings portfolios of Turkish retailers. Hurriyet financial columnist Mr Zeynel Balci argue that the new addresses for savings are likely to be Turkish stocks and real estate.
Balci wrote in his Sunday column:
There is a significant amount of savings allocated from exchange rate protected deposits to other destinations. There has been a very low premium of FX savings for a long time due to the horizontal course of exchange rates. Gold prices suffered a significant loss of power after Trump’s election victory. Although the inflation problem remains serious, interest rate reduction expectations for 2025 have begun to come to the fore. There is a CBRT interest rate decision next week. The CBRT is not expected to reduce interest rates but may soften its language vis-a-vis rate cuts. Therefore, it is possible that interest in Borsa Istanbul will continue in this period. Balci adds that real estate, too, is looking for attractive by the day.
Indeed, Turkish real estate market saw continued growth in October, with house sales rising 2.8% from the previous month to reach 165,138 units. This marked a 76.1% increase compared to October of last year. From January to October, total sales climbed by 11.9%, reaching 1.11 million units.
Balci adds:
HOUSING IS BEGINNING TO BE ATTRACTIVE
If we look at housing, sales have continued to increase since June. Monthly house sales in October exceeded 165 thousand, the highest level of this year. A significant part of this increase is domestic. There is a decline in foreign housing purchases. Also noteworthy is the increase in mortgage sales. Housing prices have increased below inflation for several years and are at a level which may be considered cheap by high net worth individuals. Of course, discounts and campaigns also have an effect, but increasing rents have reduced the effective yield on real estate investments vs TL deposit rates. The attractive aspects of housing began to come to the fore.
STOCKS LIKELY TO RISE
In addition to housing, the activity in stocks shows that cheap stocks are drawing attention. Of course, macro-political circumstances will determine whether interest will continue or not. When talking about conditions, the first thing that comes to mind is inflation. It still maintains its high trend. If inflation does not decrease in the coming months, it would be too optimistic to expect the interest rate to decrease. Turkey’s nightmare will be a situation where monetary loosening takes place against a backdrop of sticks price. Because it was tried and the results were painfully experienced.
PRİVATE DATA COLLECTOR REPORTS STAGNANT HOUSE PRICES ATTRACTING INTEREST
Private data collector Endeksa’s October 2024 housing valuation report shows that real estate prices maintain their horizontal course against inflation on a monthly basis. According to the report, house prices for sale in Türkiye increased by 26% annually, but decreased by 15% in real terms. Endeksa General Manager and Founding Partner Görkem Öğüt said that there was increasing activity real estate market, especially after the 25% limit on rent increases was lifted. “We predict that if the interest rate cut expected from the beginning of the year is realized, sales will increase further and therefore house price increases for sale may exceed inflation. “For this reason, the current period offers an opportunity for purchasing,” he said.
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