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Home-ownership, Housing Demand and Household Wealth Distribution in Turkey

Author

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  • Evren Ceritoglu

Abstract

This paper analyses recent housing market developments in Turkey. In particular, we estimate permanent income elasticity, price elasticity and interest rate elasticity of housing demand. For this purpose, we utilize twelve consecutive waves of the Turkish Statistical Institute (TURKSTAT) Household Budget Surveys (HBS) from 2003 to 2014. The most difficult aspect of empirical analysis is the estimation of a hedonic house price index. We find that the permanent income elasticity of housing demand is approximately 24% in our restricted sample. The price elasticity of housing demand is between -29% and -35%, but it is not statistically significant. Interest rate elasticity of housing demand has a negative sign, but it is measured as a very small value and it is not statistically significant. Our estimates are modest compared to previous empirical findings for the Turkish economy and emerging market economies in the literature. Moreover, robustness checks reveal that the importance of income on housing demand remained at the same level between 2003 and 2014, while the roles of house prices and interest rates are weakened during this time period with respect to past periods. As a result, our empirical analysis confirms that income is the main determinant of home-ownership and housing wealth.

Suggested Citation

  • Evren Ceritoglu, 2017. "Home-ownership, Housing Demand and Household Wealth Distribution in Turkey," Working Papers 1714, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1714
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2017/17-14
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    Keywords

    Home-ownership; Hedonic house price index; Housing demand; Household wealth distribution;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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