Received:
2026-01-18 | Accepted:
2026-03-28 | Published:
2026-06-30
Title
Turkey’s housing market: sales, prices, and their links to interest rates, exchange rates, and costs (2013–2023)
Abstract
This paper demonstrates that the relationships between sales (total and mortgage-backed) and the housing price index (RPPI) in the Turkish housing market operate within a regime-sensitive and time-dependent structure. Using monthly official data (CBRT, TÜİK) from the 2013–2023 period, a multi-layered econometric design was applied: exploratory correlations and rolling windows; VAR/VECM and Granger causality; ARDL (Bounds) for short-long term separation; Markov-Switching and Bai-Perron for regime/break detection; and finally, SARIMAX for short-term forecasting. Findings are grouped into three axes. (i) Credit-interest rate channel: ARDL long-term coefficients show that a 1-point increase in interest rates affects total sales ≈ −1.8% and mortgage sales ≈ −8.2% at the equilibrium level; error correction speeds are strong at |ϕ| ≈ 0.60–0.70. Granger tests reveal that interest rates predict both mortgage and total sales, with feedback from sales to interest rates. (ii) Price-cost/inflation channel: The RPPI is found to interact with the CPI and construction costs with short lags and in both directions; regime analysis shows that the CPI → RPPI link dominates in 2022, while the cost → RPPI link dominates in 2023. (iii) Regimes and breaks: Markov-Switching reveals the distinctiveness of high-credit regimes in mortgage sales (2019-08→2020-08; 2021-11→2022-06) and the high inflation regime in RPPI (2021-10→2023-12); Bai-Perron breaks historically confirm these episodes. In the forecasting layer, SARIMAX provides applicable short-term accuracy with sMAPE ≈ 5% for RPPI and ≈ 14% for sales. The results show that a policy reading based on single-period average coefficients is insufficient; instead, a regime-sensitive framework that jointly considers credit-price-supply channels and is calibrated with exogenous macro scenarios is necessary.
Keywords
housing market, real estate, regime change, ARDL–Bounds, VAR/VECM, Granger causality, Markov-Switching, Bai-Perron, SARIMAX, housing price index, mortgage sales
JEL classifications
C22
, E43
, R31
URI
http://jssidoi.org/jesi/article/6651
DOI
Pages
232-249
Funding
This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License
References
Akgündüz, Y. E., Neef, H. O. D. D., Hacihasanog, Y. S., & Yilmaz, F. (2023). Cost of credit, mortgage demand and house prices. Journal of Banking & Finance, 154, Article Number 106953 https://doi.org/10.1016/j.jbankfin.2023.106953
Search via ReFindit
Bai, J., & Ng, S. (2002). Determining the number of factors in approximate factor models. Econometrica, 70(1), 191-221 https://doi.org/10.1111/1468-0262.00273
Search via ReFindit
Bai, J., & Perron, P. (1998). Estimating and testing linear models with multiple structural changes. Econometrica, 66(1), 47-78 https://doi.org/10.2307/2998540
Search via ReFindit
Bai, J., & Perron, P. (2003). Computation and analysis of multiple structural change models. Journal of Applied Econometrics, 18(1), 1-22 https://doi.org/10.1002/jae.659
Search via ReFindit
Bańbura, M., Giannone, D., & Reichlin, L. (2010). Large Bayesian vector autoregressions. Journal of Applied Econometrics, 25(1), 71-92 https://doi.org/10.1002/jae.1137
Search via ReFindit
Bank for International Settlements (BIS). (2023). Macroprudential policies to mitigate housing market risks (CGFS Papers No. 69) https://www.bis.org/publ/cgfs69.pdf
Search via ReFindit
Bank for International Settlements (BIS). (2024, May 30). Residential property price statistics, Q4 2023 https://www.bis.org/statistics/pp_residential_2405.htm
Search via ReFindit
Bank for International Settlements (BIS). (2026). Residential property prices. BIS Data Portal. Retrieved March 8, 2026, from https://data.bis.org/topics/RPP
Search via ReFindit
Calza, A., Monacelli, T., & Stracca, L. (2013). Housing finance and monetary policy. Journal of the European Economic Association, 11(S1), 101-122 https://doi.org/10.1111/j.1542-4774.2012.01095.x
Search via ReFindit
Campa, J. M., & Goldberg, L. S. (2005). Exchange rate pass-through into import prices. The Review of Economics and Statistics, 87(4), 679-690 https://doi.org/10.1162/003465305775098189
Search via ReFindit
Campbell, J. Y., & Cocco, J. F. (2007). How do house prices affect consumption? Evidence from micro data. Journal of Monetary Economics, 54(3), 591-621 https://doi.org/10.1016/j.jmoneco.2005.10.016
Search via ReFindit
Canöz, İ., & Kalkavan, H. (2024). Forecasting the dynamics of the Istanbul real estate market with the Bayesian time-varying VAR model regarding housing affordability. Habitat International, 148, Article Number 103055 https://doi.org/10.1016/j.habitatint.2024.103055
Search via ReFindit
Časta, M. (2025). The impact of mortgage rates on the housing market. Journal of Housing Economics, 69, Article Number 102079 https://doi.org/10.1016/j.jhe.2025.102079
Search via ReFindit
Central Bank of the Republic of Türkiye (CBRT). (2025). Residential Property Price Index. Retrieved March 8, 2026, from https://www.tcmb.gov.tr/wps/wcm/connect/en/tcmb%2Ben/main%2Bmenu/statistics/real%2Bsector%2Bstatistics/residential%2Bproperty%2Bprice%2Bindex
Search via ReFindit
Davis, M. A., & Heathcote, J. (2005). Housing and the business cycle. International Economic Review, 46(3), 751-784 https://doi.org/10.1111/j.1468-2354.2005.00345.x
Search via ReFindit
Engle, R. F., & Granger, C. W. J. (1987). Cointegration and error correction: Representation, estimation, and testing. Econometrica, 55(2), 251-276 https://doi.org/10.2307/1913236
Search via ReFindit
European Central Bank. (2009). Housing finance and monetary policy (Working Paper No. 1069). Retrieved March 8, 2026, from https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1069.pdf
Search via ReFindit
Eurostat. (2025). Building permits. National Reference Metadata in Euro SDMX Metadata Structure (ESMS), Türkiye. Retrieved March 8, 2026, from https://ec.europa.eu/eurostat/cache/metadata/EN/sts_cons_per_esms_tr.htm
Search via ReFindit
Favara, G., & Imbs, J. (2015). Credit supply and the price of housing. American Economic Review, 105(3), 958-992 https://doi.org/10.1257/aer.20121416
Search via ReFindit
Forni, M., Hallin, M., Lippi, M., & Reichlin, L. (2000). The generalized dynamic-factor model: Identification and estimation. The Review of Economics and Statistics, 82(4), 540–554 https://doi.org/10.1162/003465300559037
Search via ReFindit
Glaeser, E. L., & Gyourko, J. (2018). The economic implications of housing supply. Journal of Economic Perspectives, 32(1), 3-30 https://doi.org/10.1257/jep.32.1.3
Search via ReFindit
Goekler, L. A. (2025). Analysis of house price fluctuations in a speculative housing market: Evidence from three Metropolitan Cities in Turkey. International Planning Studies, 30(4), 487-505 https://doi.org/10.1080/13563475.2025.2541818
Search via ReFindit
Granger, C. W. J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424-438 https://doi.org/10.2307/1912791
Search via ReFindit
Gunduz, L ., Çakir, M., & Cepni, O. (2025). House price dynamics in Istanbul: District-level analysis of convergence clubs, spillovers, and key drivers. Borsa Istanbul Review, 25(1), 195-205 https://doi.org/10.1016/j.bir.2024.12.017
Search via ReFindit
Hamilton, J. D. (1989). A new approach to the economic analysis of nonstationary time series and the business cycle. Econometrica, 57(2), 357-384 https://doi.org/10.2307/1912559
Search via ReFindit
Hsieh, C.-T., & Moretti, E. (2019). Housing constraints and spatial misallocation. American Economic Journal: Macroeconomics, 11(2), 1-39 https://doi.org/10.1257/mac.20170388
Search via ReFindit
Hyndman, R. J., & Koehler, A. B. (2006). Another look at measures of forecast accuracy. International Journal of Forecasting, 22(4), 679-688 https://doi.org/10.1016/j.ijforecast.2006.03.001
Search via ReFindit
Iacoviello, M. (2005). House prices, borrowing constraints, and monetary policy in the business cycle. American Economic Review, 95(3), 739-764 https://doi.org/10.1257/0002828054201477
Search via ReFindit
Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59(6), 1551-1580 https://doi.org/10.2307/2938278
Search via ReFindit
Kayakus, M., Terzioglu, M., & Yetiz, F. (2022). Forecasting housing prices in Turkey by machine learning methods. Aestimum, 80, 33-44 https://doi.org/10.36253/aestim-12320
Search via ReFindit
Kiyotaki, N., & Moore, J. (1997). Credit cycles. Journal of Political Economy, 105(2), 211-248 https://doi.org/10.1086/262072
Search via ReFindit
Kırca, M., & Canbay, Ş. (2022). Determinants of housing inflation in Turkey: A conditional frequency domain causality. International Journal of Housing Markets and Analysis, 15(2), 478-499 https://doi.org/10.1108/IJHMA-02-2021-0013
Search via ReFindit
Kuang, P., Mitra, K., Tang, L., & Xie, S. (2026). Macroprudential policy and housing market expectations. European Economic Review, 181, Article Number 105191 https://doi.org/10.1016/j.euroecorev.2025.105191
Search via ReFindit
Kütük, Y. (2024). Multidimensional house price prediction with SOTA RNNs. International Journal of Strategic Property Management, 28(6), 411-423 https://doi.org/10.3846/ijspm.2024.22661
Search via ReFindit
Mian, A., Rao, K., & Sufi, A. (2013). Household balance sheets, consumption, and the economic slump. The Quarterly Journal of Economics, 128(4), 1687-1726 https://doi.org/10.1093/qje/qjt020
Search via ReFindit
Mian, A., Sufi, A., & Verner, E. (2017). Household debt and business cycles worldwide. The Quarterly Journal of Economics, 132(4), 1755-1817 https://doi.org/10.1093/qje/qjx017
Search via ReFindit
Muddasir, M., & Dondas, U. (2023). A 10-year analysis of housing prices and the influence of economic factors in Turkey. Financial Internet Quarterly, 19(3), 100-112 https://doi.org/10.2478/fiqf-2023-0022
Search via ReFindit
Nasiboglu, R., Balbal, K. F., Rusiman, M. S., & Nasibov, E (2025). Location-Based housing valuation index proposal: Izmir example. Journal of The Faculty of Engineering and Architecture of Gazi University, 40(1) https://doi.org/10.17341/gazimmfd.1363942
Search via ReFindit
Özgüler, İ. C., Büyükkara, Z. G., & Küçüközmen, C. C. (2023). Discovering the fundamentals of Turkish housing market: a price convergence framework. International Journal of Housing Markets and Analysis, 16(1), 116-145 https://doi.org/10.1108/IJHMA-09-2021-0103
Search via ReFindit
Pesaran, M. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics Letters, 58(1), 17-29 https://doi.org/10.1016/S0165-1765(97)00214-0
Search via ReFindit
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326 https://doi.org/10.1002/jae.616
Search via ReFindit
Primiceri, G. E. (2005). Time varying structural vector autoregressions and monetary policy. The Review of Economic Studies, 72(3), 821-852 https://doi.org/10.1111/j.1467-937X.2005.00353.x
Search via ReFindit
Saiz, A. (2010). The geographic determinants of housing supply. The Quarterly Journal of Economics, 125(3), 1253-1296 https://doi.org/10.1162/qjec.2010.125.3.1253
Search via ReFindit
Sayin, ZM., Elburz, Z., & Duran, H. E. (2022). Analyzing housing price determinants in Izmir using spatial models. Habitat International, 130, Article Number 102712 https://doi.org/10.1016/j.habitatint.2022.102712
Search via ReFindit
Sims, C. A. (1980). Macroeconomics and reality. Econometrica, 48(1), 1-48 https://doi.org/10.2307/1912017
Search via ReFindit
Stock, J. H., & Watson, M. W. (2002). Macroeconomic forecasting using diffusion indexes. Journal of Business & Economic Statistics, 20(2), 147-162 https://doi.org/10.1198/073500102317351921
Search via ReFindit
Turkish Statistical Institute (TÜİK). (2022). Construction Cost Index, June 2022. Retrieved March 8, 2026, from https://data.tuik.gov.tr/
Search via ReFindit
Turkish Statistical Institute (TÜİK). (2025). Construction Cost Index, June 2025; Building Permits, Quarter II: April-June, 2025. Retrieved March 8, 2026, from https://data.tuik.gov.tr/
Search via ReFindit
Yasar, R. Z., & Bulut, E (2023). Why Did Housing Prices Rise to a Record Level in Turkey? An Empirical Analysis. Real Estate Management and Valuation, 31(4), 1-10 https://doi.org/10.2478/remav-2023-0025
Search via ReFindit
Yildirim, M. O., & İvrendi, M. (2021). Turkish housing market dynamics: An estimated DSGE model. Margin: the Journal of Applied Economic Research, 15(2), 238-267 https://doi.org/10.1177/0973801021990396
Search via ReFindit
Yildirim, M. O., & Yildirim, Ö. F. (2025). What drives house prices in Turkey? Evidence from Bayesian SVAR model. Economic Change And Restructuring, 58(1) https://doi.org/10.1007/s10644-024-09845-0
Search via ReFindit
RSS 1.0