Homeownership, Housing Demand, and Household Wealth Distribution in Turkey

Abstract

This article analyzes housing market developments in Turkey over the past two decades. In particular, we estimate the permanent income elasticity, price elasticity, and interest rate elasticity of housing demand. We use 14 consecutive waves of the Turkish Statistical Institute (TURKSTAT) Household Budget Surveys (HBS) from 2003 to 2016. We find that the permanent income elasticity of housing demand is statistically significant at 26% in our restricted sample. However, we find that both the price elasticity and interest rate elasticity are not statistically significant. Therefore, our empirical analysis confirms that income is the main determinant of homeownership and housing wealth.