Öneri Dergisi

1300-0845 2147-5377

Marmara Üniversitesi

10.14783/maruoneri.594957

DO HOUSE PRICES IN TURKEY FOLLOW EURO AREA TRENDS?: REGIME SWITCHING APPROACH

https://orcid.org/0000-0001-7982-4181

Yıldırım

Mustafa Ozan

https://orcid.org/0000-0001-7557-5309

Cergibozan

Raif

https://orcid.org/0000-0002-3840-6335

Demir

Caner

07 24 2019

14 52 294 314 04 03 2016

1994

Öneri Dergisi

The purpose of this study is to make a comparativeanalysis on the house price trends ofTurkey and Euro Area over the 2003-2016 period. Since the economic interactionsbetween these regions have a substantial volume, any shocks or booms in aregion might affect the other one. Within this scope, the study attempts toinvestigate the house price trends in these economies by applying separatedRegime Switching Models. The findings firstly show that the low regime inTurkey corresponds to the 2008-2012period while in the Euro Area it corresponds to the 2006-2013 period. Secondly, the impacts of the potential factorsvary across regions. For Turkey, the interestrate has a negative significant impact on house prices during both regimes, whileunemployment rate has a negative significantimpact only in the high regime. For theEuro Area, both interest rate and unemployment rate have a statistically significant, negative impact onhouse prices. As for income level, it is observed that for both regimes inTurkey and the Euro Area, income levelhas a positive impact on house prices.The breakpoints suggest that the prior impacts of the global recession around 2008 firstly appear in Euro Area but firstly endsin Turkey.

Housing market Regime Switching Model Turkey Euro Area

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