Convergence in House Prices: Cross-Regional Evidence for Turkey

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Title:

Convergence in House Prices: Cross-Regional Evidence for Turkey

Number:

19/14

Author(s):

Aytül Ganioğlu, Ünal Seven

Language:

English

Date:

May 2019

Abstract:

This paper analyzes the long-run convergence of regional house prices in Turkey. Using a non-linear time-varying factor model and quarterly house price data for the period between 2010 and 2018, we find that house prices do not converge across the 26 regions. The results reveal that the regions can be grouped into seven convergence clubs and one divergent club, confirming the heterogeneity and complexity of the Turkish housing market. These results also imply the existence of multiple steady states in the housing market. These outcomes will be beneficial to home buyers/sellers, investors, regulators and policymakers, who are interested in analyzing the dynamic interlinkages among house prices and the effects of shocks originating from the regional housing markets.

Keywords:

Housing market, House prices, Log-t test, Regional convergence

JEL Codes:

R31; O18; C33

Convergence in House Prices: Cross-Regional Evidence for Turkey