Has the housing bubble burst? Did housing prices fall or did the price increase just slow down?

In recent days, reports have begun to circulate in the public domain suggesting that housing prices are falling.

Ekonomim columnist Alaattin Aktaş reacted to the claims that housing prices are decreasing.

Emphasizing that prices are not falling, but rather the rate of increase is slowing, Aktaş also noted that a decline is expected in October due to the base effect.

A portion of Aktaş's article titled "The price increase in housing is slowing down; not the prices themselves!" reads as follows:

"According to Central Bank data, housing prices increased by 1.3 percent in May, and the annual increase fell to 45 percent as of May. The annual increase is the lowest since November 2021, a period of more than two and a half years...

The annual increase has returned to the same level after two and a half years. But where have the prices gone from and to?

In November 2021, the housing price index was 229, and the annual increase was 50.6 percent.

In May 2024, the housing price index is 1273, and the annual increase is 45 percent.

How about that, what an achievement!

After two and a half years, the same level of annual price increase has been reached.

So, how much have prices increased in these two and a half years?

Exactly 456 percent, yes, 456 percent.

The price that was 100 in November 2021 has now risen to 556.

If they ask, you say 'Housing price increases are about to stop,' you say 'We have returned to the level of two and a half years ago in annual increases!'

You won't get into trouble for saying this!

Even if the price increase in housing hasn't stopped completely, it has slowed down significantly. In fact, the annual rate is declining.

But don't you dare talk about the level of housing prices! Even if they ask, pretend you don't hear!

LET'S GO BACK A LITTLE FURTHER...

The Central Bank creates the housing price index by accepting the year 2017 as 100. Let's look at how the index, which averaged 100 in 2017, has performed.

How much did housing prices increase in 2018? There is an increase of exactly(!) 4.4 percent. This is not a monthly, but an annual increase.

2019 was also not bad(!), with an increase of 10 percent.

Then things started to get on track(!). Housing prices increased by 30 percent in 2020, 60 percent in 2021, and 168 percent in 2022. The price increase fell to 75 percent in 2023 and to 45 percent in May of this year.

The increase in 2022 was 168 percent as of December, but the annual increase in September of that year reached 189 percent.

Never mind; you just look at whether the annual rate of increase has fallen from 189 percent to 45 percent or not!

But don't take into account that the price index, which was 100 in 2017, reached 1273 in May of this year, meaning it has increased nearly 12-fold!

IT WILL FALL TO BETWEEN 20-25 PERCENT IN OCTOBER

That base effect... what it is capable of!

If the housing price increase hovers around 1.5 percent monthly in the June-October period this year, the annual increase will fall to between 20-25 percent by the end of October. Why? Because the increase in these months last year was relatively high, that's why.

Let the drums play, let the folk dances begin!

The annual price increase in housing has fallen to 20s, 25s!

As if housing prices had fallen, someone will come out and pontificate, saying 'Didn't I say there was a bubble in housing, there you go, you saw it'."

News Source: 12punto