Posted on 30 December 2010
Well it finally happened, the word bubble was mentioned in relation to the Turkish property boom, but no, we aren’t going to argue against it. This is because caution over whether the boom is a bubble has led to banking regulator the BRSA capping the maximum loan to value at 75% LTV.
We could argue all day that Turkish property is still undervalued, that prices are still affordable for the domestic population, that population and affluence growth are still measuring up against house price growth, and that these realities mean there is no bubble at the moment. But we would admit to being a little bit biased, and when faced with the prospect of a return to the boom-bust cycle for Turkey we say better safe than sorry.
Growth in the Turkish economy slowed to 5.5% in the third quarter according to Turkstat. With this, Turkey is no longer growing faster than the EU’s fastest growing economy, because Sweden grew 6.8% compared to the third quarter of last year, however, Sweden is the exception to the rule. Slovakia, which had been the fastest growing economy in the EU saw its growth slip further to 4.2% in Q3.
That said, compared to the total for the EU as a whole at 1.9% Turkey is still well and truly in the driving seat, and is still on track for the yearly growth of 8% as predicted by the OECD. So, while we would have liked growth to stay in double digits, the 5-8% year on year growth over the next 3-5 years as predicted will do us very nicely indeed.