Determinants of housing prices in Antalya: Hedonic approach

Housing expenditures have an important impact on wealth in terms of the decision of savings, consumption and investment, and these are closely associated with economic activity. Financial liberalization and globalization beginning in the early 1970s was initiated by the developed and developing countries. This development of the financial system has created great opportunities for the banking sector. Due to the positive effects of rapid rise of house prices observed on the economy, banks started to extend loans to risky subprime borrowers. Especially the excessive profit of the USA?s housing market has resulted in the housing bubble in August 2007. This crisis affecting many countries around the world, has demonstrated the importance of the housing market. The aim of the study is to analyze that how housing characteristics affect housing prices in Antalya. The dataset covers 2067 observations of the housing market in three central districts of Antalya (Muratpaşa, Konyaaltı, Kepez). These observations have been obtained through a research that based on real estate sites on the internet. The literature review shows that in most of the studies, house prices are analyzed by using hedonic price index technique. The affect of each characteristics heterogeneity good on its price is called as Hedonic Price Model. The hedonic price model is widely applied to studies of the housing market because of the heterogeneity of housing characteristics. Therefore we preferred the hedonic price method in this paper. This study consists of three sections. In the first section we present the housing prices in worldwide, Turkey and Antalya. In the second section we present the literature review, theoretical framework and the hedonic price model, and in the third section, we present the empirical estimation of the hedonic price equations. Firstly the results have been presented as descriptively and then econometric analyses have been applied to involving housing prices. In addition, we created three different models which are based on income levels (low-middlehigh income level) to detect the differences in the determinants of housing prices in different neighborhood. So these standard hedonic equations were identified for each income level and these results were compared the results with each other. Results show that the most important variable affecting housing prices is the size of dwelling (m2). Especially in the high income levels, housing prices can be significantly explained by the size of the dwelling. And the other important variables that affect housing viii prices are income level, distance to the sea, sight, gatekeeper, elevator, swimming pool, heating type and garage. The result shows that estimating the house price is quite different in all neighbourhoods, cities and countries.