A Comperative Regional Analysis for Housing Demand in Turkey

Selahattin Bekmez, Aslı Özpolat
(University of Gaziantep, Gaziantep, Turkey)

Abstract: Housing is both good and investment assets so that it plays an important role in the economy. Housing also can be characterized as the most complex economic good because of its durability, heterogeneity, locational fixity, the possibility to raise loans against housing collateral and the effect on well-developed secondary markets. On the other hand, income distribution, socio-economic justice and regional disparities imply that housing market is an important concept for social and cultural transformation as well. When compared with other countries in Europe, housing market has an excellent value in Turkey because of rapid economic growth, reasonable income tax rates, low interest rates, relatively lower risk and many other reasons. So, housing sector in Turkey is very important for those who are looking for new investments. This study aims to compare the dynamic relationship between the housing demand and the variables which determine housing demand for 11 regions of Turkey. Regions have been selected as SRE1 based on Turkish Statistical Institute classification. The model has been estimated using quarterly data from January 1992 to April 2012. Building Permits has been considered as housing demand indicator. The other variables used are GDP, Monetary Aggregate, Interest Rate and Inflation. The data used in this study were obtained from Turkish Statistical Institute (TUIK), OECD and Euro Stat. By using the variables mentioned, short term relationship between the series has been analyzed with Granger Causality Test in the first stage of the study. In the second stage of the study, long term relationship has been analyzed with Vector Autoregressive Model (VAR).

Key words: housing demand; VAR analysis; Turkey

JEL codes: R21, C13