TR Economy & Updates

[Xenon54]

Did apartments jumped from 350k to 2 millions lira for example in Turkey, i really doubt that it is.

My mom had the opportunity to buy a single family house at the black sea coast for 20k lira back in 2000...

 

[mulj]

My mom had the opportunity to buy a single family house at the black sea coast for 20k lira back in 2000...

Ok, now just to find rates of swedish kruna and turkish lira towards usd at the time and today.

 

[Xenon54]

Ok, now just to find rates of swedish kruna and turkish lira towards usd at the time and today.

Why does that matter? Real estate got expensive in Turkey before the devaluation/inflation, ask any Turk here and stop arguing about stuff that you dont know.

 

[mulj]

Why does that matter? Real estate got expensive in Turkey before the devaluation/inflation, ask any Turk here and stop arguing about stuff that you dont know.

It matters because of putting values in proper frames. I asked simple question.

 

[Nilgiri]

It matters because of putting values in proper frames. I asked simple question.

Xenon is correct.

But let us see:

USD per SEK = 0.1 in 2000 and 0.12 today. (i.e 8 or 9 Krona per USD both times)

i.e SEK inflated at pretty much same rate as USD has over this period.

Turkish (Old) Lira per USD in 2000 = 620,000 = 0.62 New Lira

New Lira today is 8.5.

Effectively Lira has inflated nearly 14 times w.r.t USD in the time period (2000 - 2020).

You acquire and hold a hard asset, its basically par for the course (by doing nothing) if its now 14 times its value in Lira than it was in 2000....when comparing to global average (USD reference).

i.e you have to get say 20+ times its value today for the investment to have been worth it (especially relative to other investments that give say a percentage return past the inflation compounded - given latter is of no real value) given the base rate relative inflation.

Whereas this ratio is close to 1 in Sweden w.r.t same global USD reference.

So I am not sure what is the point you are getting at?

 

[TheInsider]

Upward revision of Blacksea gas deposits will be announced on Friday by RTE. Upward revisions might continue as more wells are drilled.

Another announcement will be made on 20 July in TRNC while RTE is there. This is also rumored to be related to Mediterranean gas discoveries.

 

[Bogeyman]

Real estate prices increased globally in the last two decades.

Surge in European house prices stokes concerns over market resilience​

NOVEMBER 6 2020

The housing market acts as the canary in a coal mine — prices tend to fall as a wider economic downturn looms. But this year, with a deep global recession caused by the coronavirus pandemic, property valuations have kept on rising in many countries. House price growth has accelerated to an annual pace of almost 4 per cent among the OECD club of rich countries this year, with even faster rises in Europe and the US. Some financiers, however, wonder if it is only a question of time before the economic fallout from the pandemic catches up with Europe’s soaring housing market, especially after many countries reimposed lockdowns to combat a fresh wave of infections. “The pandemic is not good news or helpful in any way for the housing market,” said Matthias Holzhey, a UBS economist and co-author of its annual global real estate bubble index, which compares house prices in 25 of the world’s biggest cities. “It is clear that the economic recovery is still not happening, wealth is down, and rents are falling in most cities, so your alternative to buying a house is getting cheaper,” said Mr Holzhey. “The fundamentals just do not point to an ongoing housing boom.”

Yet all the signs are that this is exactly what is happening. While the world suffered its deepest postwar recession between the first and second quarters, house prices in the richest countries not only kept rising but accelerated, according to OECD figures. Data is more patchy for the third quarter, but it mostly points to further increases. Underpinning the resilience of housing markets are the vast stimulus packages from governments and central banks that have supported struggling companies, allowed many workers to keep earning and — crucially — kept borrowing costs near record lows. In the US, falling mortgage rates and higher state benefits combined to shield the housing market from the pandemic as prices rose by an annual rate of almost 5 per cent in the second quarter. There were even sharper price rises in much of Europe, notably Germany, the Netherlands, Portugal and Poland. Prices in Russia have soared 15 per cent, fuelled by state subsidies.

As housing costs keep climbing, the pandemic is prompting some people to abandon expensive city locations in search of more space. In the UK, prices of detached houses rose at double the rate of apartments between March and September, according to Halifax. In France, Grégoire Kiss, a 42-year-old IT manager, and his wife Blandine recently left the rented Paris apartment where they lived with their two children to buy a farmhouse on the Normandy coast. “For us the trigger came when we exited lockdown,” said Mr Kiss. “One of the positive effects of this crisis has been employers making working from home easier.” Such newly mobile workers leaving Paris may have contributed to a rare monthly drop in house prices in the city, which fell 0.5 per cent in September, though they are still up more than 2 per cent this year, having risen over a third in five years, according to research by Meilleurs Agents. “We noticed the rush in the early days of the lockdown, as 20 per cent of Parisians went to work remotely in the countryside,” said Pierre Madec, economist at the OFCE think-tank in Paris. “That begs the question: are we ready to lose 20 per cent of Paris’s population?”

Soaring property prices are also causing concern in Germany, where the central bank said in a recent report that apartments in the country’s biggest cities were 30 per cent overvalued compared with the long-term ratio of prices to rents — although it added that this reflected rising land prices rather than any “destabilising, speculative demand motives”. The volume of land sold each year in larger cities has fallen by a third since 2012 while prices have more than doubled, according to the German construction industry association. The number of new apartments built in the country last year rose 2 per cent to 293,000 — but that remained below the 400,000 a year needed to meet demand. Eyebrows were raised in Munich by last month’s €8m sale of a 300 sq m apartment, which set a new record for the city. The share prices of German property developers Deutsche Wohnen and Vonovia both recently hit new 12-year highs. With Germans agreeing 10-year mortgages at rates as low as 0.6 per cent and some banks offering to lend 100 per cent of the purchase price, it is easy to understand what is fuelling the market. “We don’t expect the German housing market to come down any time soon,” said Jochen Möbert, a real estate analyst at Deutsche Bank. “Yes, there are risks ahead. But we are seeing an influx of capital as investment funds reallocate money from financial markets to the housing market.”

One worrying sign for Europe’s housing market is that banks are starting to rein in their mortgage lending, fretting about “risk perceptions related to the general economic outlook”, according to the European Central Bank’s latest quarterly survey of lenders. Pernille Henneberg, economist at Citigroup, said in a recent report that a “lack of appetite for lending or tighter credit standards, due to worries about borrowers’ creditworthiness, may challenge the degree to which the monetary easing affects the real economy”. Similar concerns are regularly expressed by Andrea Enria, ECB head of supervision, who this week repeated his warning that the pandemic could leave eurozone lenders with an extra €1.4tn of bad loans — well above the levels of the region’s 2012 debt crisis. If this worst-case scenario happens, analysts predict it could trigger a sudden tightening of the ultra-loose mortgage market, dragging down house prices. “The eurozone is the biggest risk area,” said Mr Holzhey at UBS, adding that he was telling clients “it is time to sell out of property”.

Surge in European house prices stokes concerns over market resilience

Financiers worry that fallout from pandemic will catch up with soaring valuations

www.ft.com

UK house prices rise at fastest rate since 2014 (this news came out yesterday)

UK house prices have risen by their fastest annual rate in seven years, driven by demand for bigger homes outside the city and a temporary stamp duty holiday, according to the Nationwide Building Society. The UK Nationwide house price index rose 1.8 per cent in May compared with the previous month, bringing the average house price to a record £243,000, up £24,000 over the past 12 months. The average house price accelerated by 10.9 per cent compared with May last year, up from 7.1 per cent the previous month, its fastest pace since August 2014. “Records are melting in the white heat of the property market’s boom,” said Jonathan Hopper, chief executive of Garrington Property Finders, an estate agents, adding that agents based in desirable rural and coastal areas have been “deluged with inquiries and prices are spiking”.

The growth is partly a result of the housing tax break, introduced in July 2020 to kickstart the housing market after a collapse in home sales at the start of the coronavirus pandemic. The policy exempts the first £500,000 of any property purchase in England or Northern Ireland from stamp duty land tax, in place until the end of June. A £250,000 tax-free limit will continue to the end of September. The rise surpassed forecasts by a Reuters’ poll of economists, which predicted a 0.8 per cent monthly increase and 9.2 per cent annual growth. Robert Gardner, Nationwide’s chief economist, said people moving to larger properties as they spend more time working from home also contributed to the surge in house prices. “It is shifting housing preferences, which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic,” he said. Nationwide reported that a third of those moving or considering a move were look at different areas, with nearly 30 per cent wanting to access a garden or outdoor space more easily. Lucy Pendleton, property expert at independent estate agents James Pendleton, said families “are still feeling the pinch of snug properties”. “This is where the growth is coming from and there are still hordes of people chasing the dream of a big move this summer,” she added.

Gardner expects the housing market’s near-term outlook to be “buoyant” supported by the tax break, a low supply of housing stock and continued government income support. Low borrowing costs have improved affordability despite surging prices. Data from the Bank of England showed that in March rates on newly drawn mortgages were only marginally up from a record low reached in August 2020. Mark Harris, chief executive of mortgage broker SPF Private Clients, reported that mortgage lender Platform is launching the cheapest ever two-year fixed rate this week at 0.95 per cent. “Rates this low will continue to support the market, while the increased availability of low deposit mortgages will assist first-time buyers who are finding rising house prices increasingly difficult to deal with,” he said.

UK house prices rise at fastest rate since 2014

Growth in May surpasses expectations driven by stamp duty holiday and demand for larger properties

www.ft.com

Is there an increase in the housing market globally? Yes there is absolutely. Even if someone ignores it. Even if someone thinks house prices are only going up in Turkey.

 

[Bogeyman]

The number of new apartments built in the country last year rose 2 per cent to 293,000 — but that remained below the 400,000 a year needed to meet demand. Eyebrows were raised in Munich by last month’s €8m sale of a 300 sq m apartment, which set a new record for the city. The share prices of German property developers Deutsche Wohnen and Vonovia both recently hit new 12-year highs.

Is there an increase in the housing market globally? Yes there is absolutely. Even if someone ignores it. Even if someone thinks house prices are only going up in Turkey.

By the way, you can make a triplex villa in Turkey with 2.5 million TL. But for a 300 square meter apartment in Berlin, you need to spend 8 million euros.

 

[Nilgiri]

Is there an increase in the housing market globally? Yes there is absolutely. Even if someone ignores it. Even if someone thinks house prices are only going up in Turkey.

It needs comparison of the relative rates (between the countries in question w.r.t world "average" since say 2% is very different to say 10% increase) and across different periods (5, 10 , 20 year blocks) to know what is structural versus transient.....and also what is general base inflation driven versus what is extra/impulse-demand driven (due to demand/supply constrictions in other parts of economy).

If someone has a typical property price for Turkey each year since say 2000 or some reference year, we can see this effect if we have the same for a country of comparison....holding context things as equivalent as possible.

 

[Bogeyman]

It needs comparison of the relative rates (between the countries in question w.r.t world "average" since say 2% is very different to say 10% increase) and across different periods (5, 10 , 20 year blocks) to know what is structural versus transient.....and also what is general base inflation driven versus what is extra/impulse-demand driven (due to demand/supply constrictions in other parts of economy).

If someone has a typical property price for Turkey each year since say 2000 or some reference year, we can see this effect if we have the same for a country of comparison....holding context things as equivalent as possible.

Apart from the example I gave from Berlin, I just summarized the general situation of the real estate market around the world. In this way, we now have real data.

 

[the]

Erdogan: "I talked to the Central Bank Governor today. We have to decrease the interest rates. We will get there by July or August."

https://twitter.com/i/web/status/1399840271337144320

https://twitter.com/i/web/status/1399832044843249670

 

[Nilgiri]

Apart from the example I gave from Berlin, I just summarized the general situation of the real estate market around the world. In this way, we now have real data.

It needs apples-apples. Is the triplex villa being quoted (for Turkey) in the same location as the 300 sq apartment in Berlin?

If we use city centre, it needs city centre for the other. Suburb for suburb....and rural for rural etc.

So more data we have on those, the better. There is maybe a real estate "basket" price index too that people can find (it is not my area of expertise, so I dont know)

Then you have to take into account the preset price levels (since we are talking about increases i.e inflation vs demand)....given these are higher in more developed countries as their assets/resources are closer to relative saturation.

 

[Bogeyman]

It needs apples-apples. Is the triplex villa being quoted (for Turkey) in the same location as the 300 sq apartment in Berlin?

If we use city centre, it needs city centre for the other. Suburb for suburb....and rural for rural etc.

So more data we have on those, the better. There is maybe a real estate "basket" price index too that people can find (it is not my area of expertise, so I dont know)

Then you have to take into account the preset price levels (since we are talking about increases i.e inflation vs demand)....given these are higher in more developed countries as their assets/resources are closer to relative saturation.

Here we do not compare values that are very close to each other. So I don't see the need to make such a detailed comparison. Because the difference is very crazy. Even in Germany, I do not believe that a villa outside the city is likely to be cheap from Turkey.

 

[mulj]

Xenon is correct.

But let us see:

USD per SEK = 0.1 in 2000 and 0.12 today. (i.e 8 or 9 Krona per USD both times)

i.e SEK inflated at pretty much same rate as USD has over this period.

Turkish (Old) Lira per USD in 2000 = 620,000 = 0.62 New Lira

New Lira today is 8.5.

Effectively Lira has inflated nearly 14 times w.r.t USD in the time period (2000 - 2020).

You acquire and hold a hard asset, its basically par for the course (by doing nothing) if its now 14 times its value in Lira than it was in 2000....when comparing to global average (USD reference).

i.e you have to get say 20+ times its value today for the investment to have been worth it (especially relative to other investments that give say a percentage return past the inflation compounded - given latter is of no real value) given the base rate relative inflation.

Whereas this ratio is close to 1 in Sweden w.r.t same global USD reference.

So I am not sure what is the point you are getting at?

You explained it well, i was wrong but not completely there are some nuances, tought that discrepance is less

 

[Saithan]

It is the same everywhere, that is why central banks have official inflation targets which results in citizens always get fucked.

Here in Sweden, the inflation target is 2% but house prices increased +20% this year alone. You may think this is unusual year due to corona but house prices have increased with 10-20% every year since more than 20 years while salaries have been near stagnant for the last 40 years with 0-1.5% annual increase, i.e. even under the official inflation and far under the real inflation.

Some examples, my first apartment costed me 350 000kr in 2001 and the exact same apartment now 20 year later cost >2 000 000kr. Pizza were 29kr in 2001 and 95kr in 2021 in the exact same pizzeria with 20 year older interior. Entry level salary were 18000kr back in 2001 and is now 23000kr.

I am working at a property management company in DK registered in Sweden stock exchange, and even here in Denmark can see the unsustainable prizes in Sweden. Having so much land to build on must be nice, but recycling and reusing old buildings in new ways is more sustainable. IMO.

Investing in property is the best investment you can do. Land does not lose it's value, and property in correct places doesn't lose it's value. Which is why property is gold.

 

[Saithan]

It needs apples-apples. Is the triplex villa being quoted (for Turkey) in the same location as the 300 sq apartment in Berlin?

If we use city centre, it needs city centre for the other. Suburb for suburb....and rural for rural etc.

So more data we have on those, the better. There is maybe a real estate "basket" price index too that people can find (it is not my area of expertise, so I dont know)

Then you have to take into account the preset price levels (since we are talking about increases i.e inflation vs demand)....given these are higher in more developed countries as their assets/resources are closer to relative saturation.

Here we do not compare values that are very close to each other. So I don't see the need to make such a detailed comparison. Because the difference is very crazy. Even in Germany, I do not believe that a villa outside the city is likely to be cheap from Turkey.

Berlin vs. Istanbul the comparison would make sense that way. Though still a lot of other factors would need to be taken into consideration.

Housing in Turkey has been rising ever since AKP removed the reciprocy. And gave permission to rich oil sheiks buying shitload. Common citizen can't easily approach property anymore.

Turkey continues encouraging lira savings - Latest News

Withholding tax support on Turkish lira bank deposits will continue for another two months until July 31, the Official Gazette said on June 1.

www.hurriyetdailynews.com

The citizens should think of themselves and their own survival. No point in talking about anything else.

 

[kimov]

Real estate prices increased globally in the last two decades.

So it did thanks to negative prime rate (-0.5%) for about 10 years in Sweden. The current national prime rate is still 0% since 1-2 years. Most well off countries had also very low or even negative prime rate so all of them had increased estate prices.

This resulted in that even for a well-educated engineers like me, it would take +50 years if I payed 100% of my salary to pay the mortgage loan on the average price of a decent detached house (0.9-1M€ for 170m2) in a mid-range region of Stockholm. If I decided to only pay 50% of my current salary for the mortgage then the loan would literally never decrease since the interest would be higher then the mortgage.

The system has changed significantly since the 70s where the average blue collar worker actually could own his house debt-free after 25 years with reasonable mortgage rates. The current system is designed to have 99% of the population to be in debt forever while ever increasing part of your salary goes to the bank. The government don't count this increased living cost as inflation.

 

[Saithan]

So it did thanks to negative prime rate (-0.5%) for about 10 years in Sweden. The current national prime rate is still 0% since 1-2 years. Most well off countries had also very low or even negative prime rate so all of them had increased estate prices.

This resulted in that even for a well-educated engineers like me, it would take +50 years if I payed 100% of my salary to pay the mortgage loan on the average price of a decent detached house (0.9-1M€ for 170m2) in a mid-range region of Stockholm. If I decided to only pay 50% of my current salary for the mortgage then the loan would literally never decrease since the interest would be higher then the mortgage.

The system has changed significantly since the 70s where the average blue collar worker actually could own his house debt-free after 25 years with reasonable mortgage rates. The current system is designed to have 99% of the population to be in debt forever while ever increasing part of your salary goes to the bank. The government don't count this increased living cost as inflation.

Sweden doesn't have Danish Realkredit institutes. You have only banks like rest of the world. And banks are masters of laundering money and sucking the bonemarrow out of you.

Realkredit is mortgage system, but the rules governing Realkredit are rock solid, and doesn't permit "banking" governance, which is why it's difficult to evaluate it (Bank ppl outside Denmark don't get it). You can get a loan of 2 mio. dkk to fixed value of, let's say 98,9 (100 would mean you borrow 2 mio. and pay 2 mio, + some administration fee at the end) you end up paying in total aprox. 2,2 mio. dkk over 30 years.

Pretty cheap right. Though you can only finance up to 80% of the property, and have to finance the remaining 20% either by bank loan or save up in cash.

Realkredit in Denmark is barely 1%, it was 6-7% when the financial crises occurred. Has been going down ever since because the entire world wants to invest in Denmark.

 

[mulj]

Sweden doesn't have Danish Realkredit institutes. You have only banks like rest of the world. And banks are masters of laundering money and sucking the bonemarrow out of you.

Realkredit is mortgage system, but the rules governing Realkredit are rock solid, and doesn't permit "banking" governance, which is why it's difficult to evaluate it (Bank ppl outside Denmark don't get it). You can get a loan of 2 mio. dkk to fixed value of, let's say 98,9 (100 would mean you borrow 2 mio. and pay 2 mio, + some administration fee at the end) you end up paying in total aprox. 2,2 mio. dkk over 30 years.

Pretty cheap right. Though you can only finance up to 80% of the property, and have to finance the remaining 20% either by bank loan or save up in cash.

Realkredit in Denmark is barely 1%, it was 6-7% when the financial crises occurred. Has been going down ever since because the entire world wants to invest in Denmark.

that is like islamic banking in principal, interest rates based economy will destroy everything eventually. i did not now that, one more proof thad danish people are quite smart and responsible towards their population.

 

[Saithan]

that is like islamic banking in principal, interest rates based economy will destroy everything eventually. i did not now that, one more proof thad danish people are quite smart and responsible towards their population.

This system is not possible for Turkey because all necessary institutions to regulate, balance and protect it is not in place. Also the Central Bank is very important in this case. Especially the head, and since RTE seems fond of forcing his vision on everyone, no trust in the CB.

Realkredit has existed for over 100 years or so in Denmark.