Income is an important factor for housing demand in Turkey – paper
Profitability of housing investment in Turkey fell between 2003 and 2014
Income is the main factor in determining housing wealth and home ownership in Turkey, according to a working paper published by the Central Bank of the Republic of Turkey.
Analysing recent developments in the housing market, Evren Ceritoğlu attempts to understand the reasons behind the fall in home ownership between 2003 and 2014 in his paper, Home-ownership, Housing Demand and Household Wealth Distribution in Turkey.
“One plausible explanation of the drop in home-ownership rates is relative price changes,” he says.
His results show an “upward trend” in both the housing investment return rate and nominal house-price-to-rent ratio, indicating the profitability of housing investment declined during the period under review.
“As a result, the share of rent in [the] total household budget of tenants fell considerably,” Ceritoğlu says.
The paper also shows the role of prices and interest rates in determining housing demand weakened during the period.
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