House price dynamics and relations with the macroeconomic indicators in Turkey

Abstract

Purpose The purpose of this study is to make an analysis of the short- and long-term effects of inflation, exchange rate, housing interest rate, industrial production index, total housing loans and housing volume on housing inflation in Turkey, taking into account the multiple structural breaks. Design/methodology/approach Multiple structural break Lee-Strazicich unit root test, autoregressive distributed lag bound test and Granger causality test based on error correction model were used. Findings There is both a short- and long-term relationship between housing prices and macrovariables. Housing prices are mostly affected by housing interest rates, housing volume, real exchange rate and total housing loans in the short run. In the long run, it is mostly affected by total housing loans, housing volume and housing interest rates. Research limitations/implications The variables used in the analysis are: housing price index, consumer price index, dollar rate, housing interest rate, industrial production index, total housing loan amount and domestic loan volume. Because the data that variables started common is 2010:M01, the period starting from this date until 2021:M12 is considered. The research covers only Turkey as a country. Determining the micro- and macroeffects of housing prices can always offer solutions for the problems experienced in housing supply and housing demand. Originality/value While investigating housing prices, there are no studies in which total housing loans and housing volume are included in the model together. However, it is important to analyze the effect of the current conjuncture, in which there has been constant increases in foreign exchange rates and high inflation in recent years, on housing prices in Turkey. In this study, investigating these effects by using econometric methods that include structural breaks also increases the original value of this study.