14 April 2010

REIDIN.com INDEXFocus Turkey March 2010 Real Estate Sector Analysis -Residential

INTRODUCTION

The REIDIN.com Turkey Residential Property Price Indices (TRPPI) is designed to be a reliable and consistent benchmark of housing prices in Turkey. The purpose is to measure the average differences in house prices in a particular geographic market.
The monthly REIDIN.com TRPPI uses a stratified median index approach for index calculation with data covering the 7 major cities and their 71 districts, including Istanbul, Ankara, Izmir, Adana, Antalya, Bursa and Kocaeli. The national TRPPI (Turkey Composite Index) is a weighted average of those city indices.
Index series are set at 100 starting at the beginning of June 2007 and are calculated by using a moving average algorithm.

The residential rent prices increased 0.26% in Adana, 0.36% in Ankara, 0.55% in Bursa, 0.53% in Istanbul and 0.06% in Kocaeli; on the other hand, prices were down 0.12% in Antalya and 0.05% in Izmir during March 2010.

    The residential rent prices increased 1.11% in Adana, 0.66% in Antalya, 0.30% in Istanbul, 0.42% in Izmir and 0.12% in Kocaeli; on the other hand, prices were down 0.68% in Bursa and remain constant in Ankara during March 2010.

    When adjusted by inflation rate according to the Consumer Price Index, the residential real estate investments caused a loss to the investors in real terms in February 2010. Accordingly, the rate of loss in real terms is 0.90% in Adana, 0.94% in Ankara, 0.97% in Antalya, 0.95% in Bursa, 0.90% in Istanbul, 1.00% in Izmir and 0.93% in Kocaeli on monthly basis.

DETAILED ANALYSIS

The monthly REIDIN.com TRPPI uses a stratified median index approach for index calculation with data covering the 7 major cities and their 71 districts, including Istanbul, Ankara, Izmir, Adana, Antalya, Bursa and Kocaeli. The national TRPPI (Turkey Composite Index) is a weighted average of those city indices. Index series are set at 100 starting at the beginning of June 2007 and are calculated by using a moving average algorithm.

Table 1.1 REIDIN.com House Sales Price Indices (Nominal, June 2007 = 100)

Chart 1.1 Turkey Composite House Sales Price Index (Nominal, June 2007 = 100)

Chart 1.2 Turkey Composite Rent Index (Nominal, June 2007 = 100)

Table 1.2 REIDIN.com Rent Indices (Nominal, June 2007 = 100)

The residential sales prices increased 0.26% in Adana, 0.36% in Ankara, 0.55% in Bursa, 0.53% in Istanbul and 0.06% in Kocaeli; on the other hand, prices were down 0.12% in Antalya and 0.05% in Izmir during March 2010.

Chart 1.3 % Change in Residential Sales Prices, March 2010 

The residential rent prices increased 1.11% in Adana, 0.66% in Antalya, 0.30% in Istanbul, 0.42% in Izmir and 0.12% in Kocaeli; on the other hand, prices were down 0.68% in Bursa and remain constant in Ankara during March 2010.

Chart 1.4 % Change in Residential Rent Prices, March 2010

When the residential real estate investments and the financial investment instruments are adjusted by inflation rate according to the Consumer Price Index (CPI), it is seen that the investment instrument having the highest monthly real return is the ISE-100 Index.

When adjusted by inflation rate according to the Consumer Price Index, the residential real estate investments caused a loss to the investors in real terms in March 2010. Accordingly, the rate of loss in real terms is 0.04% in Adana, 0.08% in Ankara, 0.11% in Antalya, 0.10% in Bursa, 0.04% in Istanbul, 0.14% in Izmir and 0.08% in Kocaeli on monthly basis.

When adjusted by inflation rate according to the Consumer Price Index (0.58%), the monthly real profit rate of the, US Dollar, Istanbul Stock Exchange (ISE-100 Index), Gold (ingot) and Deposit Rate were 0.69%, 2.45%, 2.42% and 0.07% respectively, while Euro posted loss of 0.15%.

Chart 1.5 Residential and Financial Real Returns (%), March 2010

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