Macro and Politics

* TURKSTAT will release November house sales figures @ 10:00 local time. Housing sales rose by 9.1% m/m in October and contracted by 0.5% y/y, amounting to 164,306 units. Seasonally adjusted figures point to a softer underlying trend, with sales increasing by solely 0.3% m/m and declining by 2.8% y/y. Mortgage-backed sales reached 23,527 units in October, registering rises of 10.6% m/m and 311.5% y/y; however, on a seasonally adjusted basis, these transactions fell by 0.7% m/m and by a steep 28.1% y/y. Turning to mortgage rates, the average housing loan rate declined from 38.8% in September to 37.9% as of October, while the comparable rate in the same month of last year (October 2024) stood at 41.5%. The annual moderation in mortgage rates remains limited, and the strong y/y increases in mortgage-backed sales observed in recent months — often in the 30% to 60% range — eased markedly to 10.6% in October. Considering the headline print alongside the trajectory of mortgage rates and seasonally adjusted indicators, we judge that the underlying momentum in housing demand is weaker than suggested by the headline figures.

* The CBT will release the Residential Property Price Index (RPPI) for November @ 10:00 local time. The Residential Property Price Index (RPPI) rose by 1.6% m/m and 31.6% y/y in October, reaching 198.8, while prices dropped by 1% y/y in real terms. Although the annual real contraction in house prices has persisted uninterruptedly since February 2024, the pace of the decline has moderated, stabilizing within the 1% – 1.5% range over the past five months. A closer look at the regional breakdown shows that, in October, house prices increased by 2.7% m/m in Istanbul, 1% in Ankara and 1.8% in Izmir, with corresponding annual gains of 32.4%, 38.4% and 30.7%, respectively. Ankara recorded the highest annual price increase at 38.4%, while the Aydın, Denizli and Mugla region posted the lowest at 23.1%. On the financing side, the average mortgage rate declined from 38.8% in September to 37.9% in October, compared to 41.5% in the same period of 2024. Overall, the data suggest that the prolonged weakness in real house price dynamics is gradually fading, with annual real price changes likely to move towards positive territory in the near term.

*The Treasury is scheduled to complete its December issuance program today with a direct sale of a 2y TLREFK-indexed lease certificate and 5y CPI-indexed bond auction. According to the Treasury and Finance Ministry’s three-month domestic borrowing strategy for the December 2025 – February 2026 period, domestic redemptions amounting to TL109.4bn in December will be met with planned borrowing of TL124.2bn, implying a rollover ratio of 114%. Hence, having already raised a total of TL98bn from the domestic markets so far, the Treasury is likely to borrow around TL26bn via today’s direct sale and bond auction.

* The central government budget posted a surplus of TL169.5bn in November, while the primary balance recorded a surplus of TL287.4bn. In the same period of last year, the budget had posted a deficit of TL16.6bn, alongside a primary surplus of TL129.6bn. With the November outturn, the 12-month cumulative budget deficit narrowed from TL2.3tn to TL2.1tn, while the 12-month primary deficit declined sharply from TL245bn to TL87.2bn. Over the Jan – Nov period, the cumulative budget deficit reached TL1.3tn, corresponding to 65.8% of the official 2025 budget deficit target, while the primary balance recorded a surplus of TL666.7bn. We assess that the November budget surplus was driven predominantly by strong revenue performance, with no clear evidence of a broad-based tightening on the expenditure side. We maintain our 2025 budget deficit forecast at TL2.3tn, equivalent to 3.6% of GDP. As a reminder, under the Medium-Term Program (MTP) covering 2026–2028, the 2025 budget deficit-to-GDP ratio was revised upward from 3.1% to 3.6%, while the 2026 ratio was revised from 2.8% to 3.5%.