Macro and Politics

*TURKSTAT will release May housing sales figures @ 10:00 local time. Total housing sales increased by 11.9% m/m in April, reaching 126,808 units, while annual growth came in at 2.8%. First-hand sales rose by 9.6% y/y to 40,306 units, whereas second-hand transactions remained broadly flat, declining marginally by 0.3% y/y. Mortgage-backed housing sales increased by 40.5% y/y to 25,771 units, while remaining largely unchanged compared to March. Accordingly, the share of mortgaged sales in total transactions declined from 22.9% in March to 20.3%. The increase in market interest rates following the change in the Central Bank of the Republic of Türkiye’s funding composition at the end of March appears to have been reflected in housing loan rates as well. Indeed, the average mortgage rate rose to 36.6% in April from 34.7% in March. Despite this increase, mortgage rates continuing to remain below the roughly 39.5% levels recorded in the same period last year has continued to support the strong annual performance in mortgage-backed sales. Nevertheless, we assess that the recent uptick in interest rates may lead to more visible pressure on credit-driven housing demand in the period ahead.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the June 5 – 12 period at 14:30 local time today. Based on our calculations derived from the CBT’s analytical balance sheet, we estimate that during the June 5 – 12 period, gross FX reserves fell by US$7.5bn to US$152bn, while net FX reserves declined by close to US$1.9bn to US$44.9bn. We expect today’s official data to indicate a reserve decline broadly in line with our estimates. Foreign investors were net sellers of USD856.9mn in the equity market during the May 26 – June 5 period, marking the largest weekly foreign equity outflow on record. The bond market, excluding repo transactions, also registered a net foreign outflow of USD279.6mn, while foreigners’ share in the total bond stock edged down from 5.6% to 5.5%. During the same period, residents’ FX deposits (excluding gold and adjusted for EUR/USD parity effects) declined by USD1.3bn, while their total FX deposits, including gold and adjusted for price effects, fell by USD1.7bn during the May 26 – June 5 period. In terms of official reserves, the CBT’s gross FX reserves increased modestly by USD193mn to USD159.5bn during the May 26 – June 5 period, while net FX reserves rose by USD1.0bn to USD46.8bn. Over the same period, the swap stock declined by USD1.8bn to USD17.4bn, while net reserves excluding swaps improved by USD2.8bn to USD29.4bn.