Macro and politics

*The Treasury tapped the domestic markets at an amount of TL34.3bn (including non-competitive sales) via yesterday’s 3y CPI-linked and 6y FRN bond auctions. Together with yesterday’s double auctions, the Treasury total domestic borrowing so far this month has reached TL248.3bn. After yesterday’s auctions, the Treasury will hold the direct sales of 1y gold-denominated bond & 1y gold-denominated lease certificate on January 24th and finalize its domestic borrowing program for January. According to three-month (Jan – Mar 25) domestic borrowing strategy, the Treasury has a total domestic redemption of TL225.4bn in January, while in return plans to borrow TL293.8bn throughout the month, indicating a roll-over ratio of 130%. Hence, as per the domestic borrowing strategy, the Treasury is likely to borrow around TL45bn via Friday’s direct sales.

* The total number of house sales in December reached 212,637 units, marking a robust annual increase of 53.4% and a monthly rise of 39%. In 2024, the overall house sales grew by 20.6% y/y, totaling 1,478,025 units. Mortgage-backed sales in 2024, however, declined by 10.8% relative to the previous year, totaling 158,486 units. Sales to foreigners decreased by 32.1% y/y in 2024, amounting to 23,781 units. In the December figures, mortgage-backed sales amounted to 23,277 units, showing a 6.8% increase on a monthly basis, while recording a strong year-on-year growth of 285.3%. Upon analyzing mortgage interest rates within the housing market, it is evident that the average mortgage rate, which stood at 42.1% in December 2023, exhibited a marginal decline to 41.1% in December 2024. This reflects a minimal year-on-year variation, indicating relative stability in the cost of financing for residential properties. Despite persistently high mortgage rates, the noticeable annual rise in mortgage-backed sales can be attributed to expectations of future price increases, following a period of real declines in housing prices. Turning to the details of the December data: Sales to foreigners rose by 17.2% y/y to 2,418 units, while the share of foreign sales in total housing sales dropped to 1.1% from 1.4%.