THE EFFECT OF SELECTED MACROECONOMIC VARIABLES ON THE HOUSING PRICE INDEX IN TURKEY

Abstract

This study investigates how the house price is affected by macroeconomic variables such as interest rate, exchange rate, money supply and inflation rate. Housing supply and housing demand determines house price. On the one hand, housing supply dimensions covers contruction cost, existing land, housing stock. On the other hand, housing demand dimension involves interest rate, consumer price index as the indicator of inflation, income, population growth and employment rate. In order to measure the effects of macroeconomic variables more accurately, the housing price index variable determined by the Central Bank was used. Depending upon monthly data for the period 2010-2023 in Turkey, VAR models are used. In this way it is intended to find the direction and degree of the effect of selected macroeconomic variables on the house price index by performing impulse response function and variance decomposition analysis. According to this analysis findings, interest rate and exchange rate had a significant effect on the house price index. In line with the results obtained after the variance decomposition analysis, it was determined that the interest rate had a 19% effect and the exchange rate had a 14% effect on the house price index at the end of the 10th period.