How the consequences of the COVID-19 pandemic affected housing sector? Empirical evidence from Turkey

Abstract

PurposeThis study aims to analyze the relationship between the consequences of the pandemic and the housing sector with econometric tests that allow for structural breaks.Design/methodology/approachStudy data were collected weekly between March 9, 2020, and February 4, 2022, and analyzed for Turkey. In the model of the study, housing loans were used as a housing market indicator, and the number of new deaths and new cases were used as data related to the pandemic. The exchange rate, which affects the use of housing loans, was added to the model as a control variable. This study was analyzed to examine the relationship between the pandemic and the housing sector, time series analysis techniques that allow structural breaks were used.FindingsBased on the result of the analyses, it was concluded that there is a long-run relationship between the pandemic stages and housing markets along with structural breaks. As a result of the time-varying causality test developed to determine the causality relationship between the variables and its direction, a bidirectional causality relationship was identified between all variables at certain dates.Research limitations/implicationsStudy data were collected weekly between March 9, 2020, and February 4, 2022, and analyzed in the case of Turkey.Practical implicationsBased on results of the study, it is recommended that policy makers and market actors take into account extraordinary situations such as pandemics and create a budget allocation that is always ready to use for this purpose.Originality/valueThe empirical examination of the relationship between the pandemic and the housing sector in Turkey provides originality to this study in terms of its topic, sample, methodology, contribution to the literature and potential policy recommendations.