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Volume 13
Issue 3
Online publication date 2017-09-10
Title Demand-side factors of housing price increases in Turkey: Blanchard-Quah SVAR model
Author Hulya Deniz Karakoyun, Nurtac Yildirim
A bubble in the housing sector is defined as an unprecedented upsurge in house prices which cannot explained by fundamental determinants of the housing sector. This study examines demand-side factors of real estate sector in Turkey in order to expose whether house price increases in the country can be counted as a bubble. We use the Blanchard-Quah SVAR model to empirically reveal the relationships between the real mortgage interest rates, house price gap, price-rent-ratio and purchasing power parity. The results of the paper indicate that real interest rates and other variables have a significant explanatory power in the long run whereas house prices cannot be explained by these variables in the short run. Therefore it can be asserted that the house price increases in Turkey cannot be evaluated as a bubble in the long run.
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Keywords Real estate, housing demand, real estate bubble, Blanchard-Quah, Turkey
Pages 312-332
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