The Effect of Credit Supply on House Prices: Evidence From Turkey

Tunç, Cengiz

doi:10.1080/10511482.2019.1661266

Cited by 12 publications

(11 citation statements)

References 28 publications

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“…Recent studies regarding Turkey determine or forecast housing prices with financial, macroeconomic and housing sector-related predictors, either combined or separately; Coskun and Jadevicius (2017) find noteworthy increases, with some potential overvaluations over 2010–2014. Tunc (2020) focuses on the role of credit supply on house prices for Turkey and provides evidence that an expansion in credits has an imposing and significant influence on prices. Ceritoglu et al (2019) focus on price exuberance periods through housing sector-related factors via the GSADF approach.…”

Section: Literature Reviewmentioning

confidence: 99%

Discovering the fundamentals of Turkish housing market: a price convergence framework

Özgüler

Büyükkara

Küçüközmen

2022

IJHMA

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Purpose The purpose of this study is to determine the Turkish housing price and rent dynamics among seven big cities with a unique monthly data set over 2003–2019. The secondary purpose is to examine bubble dynamics within the price convergence framework through alternative tests. Design/methodology/approach The paper conducts two autoregressive distributed lag (ARDL) cointegration estimates for housing prices and rents and applies conditional error correction model to investigate the long-run drivers of the Turkish housing market. The authors compare ARDL cointegration in-sample forecasts and discounted cash flow (DCF) estimates with actual prices to determine the timing, magnitude and collapse period(s) of bubbles within the price convergence framework. In particular, the generalized sup augmented Dickey–Fuller (GSADF) approach time stamps multiple explosive price behaviors. Findings The ARDL results confirm the theory of investment value by addressing mortgage rates, the price-to-rent ratio and rents as the fundamental factors of house prices. The price-to-rent ratio offers a comparison mechanism among houses deciding to buy a new house in which rents increase monthly real estate investment returns, and mortgage rates act as the discount rate. One key finding is that these dynamics have a greater impact on house prices than mortgage rates. Furthermore, the ARDL, DCF and GSADF findings exhibit temporal overvaluations rather than bubble signals, implying that housing price appreciations, including explosive behaviors, are consistent with fundamental advances. Originality/value This paper is considered to be innovative in determining housing market dynamics through two different ARDL estimates for the Turkish housing price index and rents in real terms as dependent variables. The authors compare the boom and collapse periods of the real housing price index and its fundamentals via the GSADF test. A final key feature of this research is its extensive data set, with 11 different regressors between 2003 and 2019.

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Section: Literature Reviewmentioning

confidence: 99%

Discovering the fundamentals of Turkish housing market: a price convergence framework

Özgüler

Büyükkara

Küçüközmen

2022

IJHMA

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“…Most of the previous studies such as Yener et.al. (2020) and Tunc (2020) employ house price data at the countrywide level or province-level at best and emphasize the role of macroeconomic indicators such as capital inflows, interest rates, and disposable income or some regional dynamics such as population density, unemployment, climate, and education. Our study utilizes the district-level data, points to the role of the Turkish CBI program and the inflow of relatively wealthy foreigners as another determinant of house prices, at least in some specific districts of Istanbul.…”

Section: [Table 1 Near Here]mentioning

confidence: 99%

Buying citizenship: A boon to district-level house prices in Istanbul

Aysan

Genç

Gunduz³

2021

SSRN Journal

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Citizenship by investment (CBI) programs have recently garnered significant academic and media attention. Turkey introduced such a program in 2017 that offers citizenship in exchange for investment in residential property. Eventually, thousands of foreigners, mainly from the Middle East and Asia have purchased houses, particularly in Istanbul.Foreigners' share in total houses sold in Istanbul almost sextupled and exceeded 10 percent of total sales. This study estimates the short-run impact of relatively wealthy foreigners on the residential property prices in Istanbul to buy a Turkish passport. It finds that the Turkish CBI program positively impacts house prices by two percent in the districts, which are likely to be favored most by immigrant investors.

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“…In most of these studies, macroeconomic variables such as housing loan interest rate, mortgage credits and economic affordability (i.e. output and industrial production) stand out as the most important factor in explaining house prices [2] (Akkay, 2021; Karagöz and Özkubat, 2021; Karadaş and Salihoğlu, 2020; Varlık, 2020; Tunc, 2020; Yıldırım and Yağcibaşi, 2019; Kolcu and Yamak, 2018; Kırca and Canbay, 2021).…”

Section: Introductionmentioning

confidence: 99%

Does tourism affect house prices in Turkey? Evidence from smooth structural break tests

Yıldırım

Karul

2021

IJHMA

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Purpose The purpose of this study is to examine the impact of tourism activities on house prices in Turkey from January 2010 to March 2020. Design/methodology/approach It is used newly developed cointegration and causality tests based on Fourier approximation. These methods consider smooth structural breaks and do not need to recognize a priori date number and/or form of breaks. Findings Empirical findings show that international tourism activities have a substantial role in the escalation of house prices in Turkey. Findings also indicate a rise in industrial production enhances house prices while the mortgage lending rate exhibits a negative influence on house prices. Additionally, the evidence from Fourier causality tests reveals the unilateral causal linkage from tourism to house prices. This situation also shows that the tourism sector has a substantial role in stabilizing house prices’ rapid rise as a policy implication. Originality/value Although a large number of papers have been analyzing the link between house prices and macroeconomic variables, this study eliminates the lack of papers examining the link between tourism and house prices in Turkey by using the new cointegration and causality methods that consider smooth structural changes.

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The Effect of Credit Supply on House Prices: Evidence From Turkey

Cited by 12 publications

References 28 publications

Discovering the fundamentals of Turkish housing market: a price convergence framework

Discovering the fundamentals of Turkish housing market: a price convergence framework

Buying citizenship: A boon to district-level house prices in Istanbul

Does tourism affect house prices in Turkey? Evidence from smooth structural break tests

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