Relationship between residential property prices and macroeconomıc variables in Turkey

ABSTRACT

The aim of this study is to analyse the existence of a long-term relationship between residential property prices and indicators such as gross domestic product growth rate, inflation rate, foreign direct investment as percentage of GDP, household income, population, exchange rate, total credits to households as percentage of GDP, employment rate and gold price index in Turkey. For this, annual data covering the years 1971–2019 were used in the relevant variables. Cointegration analyzes were performed to determine the long-term balance between residential property prices and variables. Vector error correction model (VECM) is applied to see the possible imbalances in the long run. Granger causality analysis was used to determine causality from variables to residential property prices and vice versa. According to the empirical findings of the study, it has been observed that there is a long-term positive relationship between residential property prices and gold price index, inflation rate, foreign direct investment, household income and population in Turkey. It has been found that there is a negative relationship between the gross domestic product growth rate, exchange rate, employment rate, total credits to households and residential property prices in the long run.

KEYWORDS:

• Residential property price index
• gold price index
• ADF test
• Johansen cointegration test
• VECM and Granger causality analysis

JEL CLASSIFICATION:

• O18
• R31

Disclosure statement

No potential conflict of interest was reported by the author(s).