The Central Bank of the Republic of Turkey (CBRT) has released its “May 2022 Financial Stability Report”.
The house price report has caught the eye.
NORMALIZATION IS EXPECTED IN HOUSING PRICES
The Central Bank of the Republic of Turkey said housing prices have also risen globally and included the following statements in the report:
“With the bookization strategy, the stability of the exchange rate, the improvement in inflation expectations and the recovery in housing supply, it is expected that house prices will normalize. In addition to the forecast of a further rise in house prices due to rising construction costs, the real level of interest on housing loans and the growing demand for investment housing to protect against the inflation are also contributing to the revival of home loan growth.
In the general assessment part of the report, some main topics have been addressed.
The main headings of the general assessment section of the report are as follows:
-The Russian-Ukrainian conflict and the quarantine measures taken against the growing number of cases in China pose a downside risk to global economic activity.
Economic activity, which followed a sustained course throughout 2021 with the contribution of domestic and external demand, also maintained this course in the first quarter of 2022.
– Household indebtedness has decreased since the 3rd quarter of 2020 with the effect of the good course of economic activity, and it is well below the EM average in terms of level.
– While the moderate trend in the ratio of real sector financial liabilities to financial assets is maintained, the improvement in indicators of liquidity, profitability and corporate debt repayment continues and strengthens.
– TL business loans are found to be effective in accelerating loan growth from 2022.
The effects of the strengthened macroprudential framework to ensure that loans respond to economic activity in accordance with their purpose are closely monitored.
The good outlook for the quality of banking sector assets is maintained.
– Although the positive outlook for banks’ short-term and long-term liquidity indicators continues, the sector has strong buffers that can manage its liquidity risks.
– The maturity mismatch between TL and foreign currency denominated assets and liabilities on banks’ balance sheets has improved significantly.
The profitability of the banking sector, which has been on a recovery trend since the second half of 2021, has continued to increase over the past two quarters, strengthening across the sector.
Banks maintain a solid capital structure against possible risks.