Construction Cost Index Soars 28.66% YoY, 0.45% MoM: Market Implications

The construction cost index rose by 0.45% month-over-month and 28.66% year-over-year in June, indicating continued cost pressures in the sector.

Detailed Analysis of YoY Growth

■The 28.66% increase surpasses the 19.23% level recorded in 2023.

■In major cities like Istanbul and Ankara, cost hikes reached up to 35%.

■Key cost drivers include raw materials and labor.

Potential Market Impacts

■The TL’s depreciation against the USD has raised the cost of imported materials, pushing overall costs higher.

■Shares in the construction sector on Borsa İstanbul saw a 2-3% uptick following the index rise.

■In the credit market, increased demand for construction loans could push interest rates up by 0.25 points.

Macroeconomic Indicators and Future Outlooks

■TÜİK’s VAT data shows a 4.5% rise in construction costs.

■The Central Bank may consider a 0.125 point rate cut, factoring in inflation expectations.

■Employment data indicates a 1.8% growth in the construction sector, signaling rising labor demand.

Markets will closely monitor how the rise in the construction cost index affects long‑term housing prices and sector profitability. Policy decisions on interest rates may lead to volatility in the credit market.