The urbanization policies and factors effecting the housing demand in Turkey: A SVEC analysis

Unlike many other markets, housing is not only a good asset, but also an investment asset. Because of this characteristic, housing market constitutes a significance in general economy. It is also important indicator of consumer spending and total welfare. Housing and sheltering cost is an essential part of household expenditure. On the other hand, Income distribution, socio-economic justice and regional disparities imply that housing market is an important concept for social and cultural transformation. When housing market in Turkey is examined between 1986 and 2010, significant number of volatilities occurred because of high inflation, the South East Asian economic crisis, the Marmara Earthquake, 2001 and 2008 crisis. In this study, the dynamic relationship between the housing demand and macroeconomic variables determining the housing demand in Turkey has been analyzed. The model has been estimated using quarterly data from 1998.1 to 2013.4. Building Permits has been considered as housing demand. The other variables used for determining the housing demand are Inflation Rate, Interest Rate, Gross Domestic Product and Stock Market Index.The data used in this study were obtained from Turkish Central Bank (TCMB) and Turkish Statistical Institude (TUIK). By using the variables above, short term relationship among the series has been analyzed with Johansen CointegrationTest and Granger Causality Test in the first stage of the study. In the second stage of the study, long term relationship has been analyzed with Structural Vector Error Correction Model (SVEC) with impulse response and Variance Decomposition.