An applied analysis on the presence of bubbles in house prices in Turkey

Since the beginning of human history, the concept that has the most important place among the basic needs is 'shelter'. Housing, which meets this need for shelter, is also a tradable good. Housing, which is a source of security and peace for individuals and provides them shelter, has become one of the main indicators of economic development as it affects many secondary sectors. Housing evokes different meanings for individuals, such as socialization, protection, and development of belonging, rather than shelter. Recently, the significant increase in housing prices in Turkey has drawn attention. In this thesis, the existence of bubbles in housing prices, which have been on the rise in recent years, has been tested. In the first chapter of this thesis, the housing sector was mentioned. In this chapter, information on the importance of the housing sector, its place in the economy, pricing, housing demand, and housing supply were explained. The second chapter tries to clarify the concept of price bubble. In this chapter, the theoretical framework of the price bubble was the subject of research. Various definitions were given about the concept of price bubbles. The lifespan of price bubbles was mentioned and the indicators related to the housing price bubble were given. In the third chapter, the price bubbles experienced in history were examined under two headings and their results were explained. The last chapter presented empirical findings on whether there has been a price bubble in housing prices in Turkey. In this thesis, the housing prices in Turkey were tested using the SADF and GSADF tests to detect whether there have been price bubbles. A 144-month data set covering the period from January 2010 to December 2021 was used in the analysis. The results were interpreted with SADF and GSADF test graphs. Consequently, price bubbles in housing prices were detected in all regions across Turkey. The duration, size, and intervals of the bubbles were elaborated on in this study.