The dynamics of house prices and fiscal policy shocks in Turkey

Abstract

This study examines the interaction between house prices and government spending, mortgage interest rates, and gross domestic product in Turkey. The ARDL bounds test approach is applied to quarterly data covering the 2010:1-2017:4 period. Findings indicate that there is a statistically significant long-run and shortrun cointegration between the two house price indexes and government spending, mortgage rates, and GDP. An increase in government spending has a statistically significant positive effect on house prices. The study also indicates that mortgage interest rate and GDP have a statistically significant effect on house prices.