Macro and Politics

*TURKSTAT will release August housing sales figures @ 10:00 local time. Total house sales declined by 17% y/y to 123,603 units in July. First-hand house sales fell by 8.6% y/y to 42,529 units, while second-hand house sales decreased by 20.8% y/y to 81,074 units. Mortgage-backed sales, by contrast, rose by 23.7% y/y to 23,888 units, although their share in total house sales edged down to 19.3% in July from 20.0% in June. Turning to financial conditions in the housing market, the average mortgage rate increased to 41.46% in July from 40.34% in June, compared with 42.56% in July 2025. While we assess that base effects were the main driver of the marked slowdown in the annual growth of mortgage-backed sales in July, we believe that elevated financing costs continue to weigh on credit-driven housing demand.

* The CBT will release weekly foreign portfolio flows, money and banking statistics, and international reserves for the September 4 – 11 period today at 14:30 local time. Based on our calculations using the CBT’s analytical balance sheet, we estimate that gross FX reserves declined by USD5.5bn to USD178.7bn, while net FX reserves fell by USD3.7bn to USD61.9bn during the week. We expect today’s official data to confirm a decline in reserves broadly in line with our analytical balance sheet-based estimates. To recall the previous week’s data: Foreign investors were net sellers of USD647.6mn in the equity market in the August 28–September 4 week, while turning net buyers of USD156.7mn in the bond market, excluding repo transactions. This marked the end of four consecutive weeks of foreign inflows into equities, while the bond market returned to net foreign inflows following three weeks of outflows. Moreover, foreigners’ share in the total bond stock increased from 7% to 7.2% over the same period. Over the same period, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) fell by USD526mn, while their total FX deposits (including gold, adjusted for the price effect) decreased by USD277mn. In terms of official reserves, the CBT’s gross FX reserves fell by USD4bn to USD184.3bn, while net FX reserves decreased by USD1bn to USD65.5bn. Meanwhile, the swap stock rose by USD1.5bn to USD12.2bn, resulting in a sharper USD2.5bn decline in net reserves excluding swaps to USD53.3bn.

* The Residential Property Price Index (RPPI) increased by 0.9% m/m and 23% y/y to 236.8 in August, while declining by 6.5% y/y in real terms. The New Tenant Rent Index (NTRI) rose by 2.3% m/m and 26.4% y/y to 336.2, while recording a 3.9% annual decline in real terms. The August data indicate that both residential property price and rent growth continue to lag inflation, with the real declines in both measures becoming more pronounced.