Housing Prices - Dec 2011

Turkey's central bank has reported housing price data for December, which showed national house prices up 0.9% MoM and up 11.3% YoY, whilst prices in Istanbul were up 1.4% MoM and 13.3% YoY. For newly built housing, prices were up 0.7% MoM and 10.3% YoY. For all the indexes except Istanbul the  MoM rises have clearly slowed from the levels seen during the first half of 2011, but none of them are showing significant signs of real pressure.

This matters for Turkey's banks, since loans to households account for 37.8% of total banking loans, and of those, exactly a third are housing loans.  But this proportion peaked during 1Q11 at 34.3% and has been falling since. So, by December, loans to households were growing by 29% YoY, but housing loans had risen only 21.2%. In fact, the sequential momentum of housing lending has been leaking away consistently since August, and by December the 6m momentum trendline was negative 0.21SDs - its first negative reading since 2009.

Clearly one would expect the housing loans momentum measure to be an early indicator for housing prices, so should expect to see negative pressure emerge over the coming year.