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Effect of Inflation, Exchange Rate, Interest Rates and Income on House Sales: a Case of Turkiye

Author

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  • Orhan SANLI

    (Aydın Adnan Menderes Üniversitesi, Nazilli İİBF, İktisat Bölümü, Aydın, Türkiye)

  • Osman PEKER

    (Aydın Adnan Menderes Üniversitesi, Nazilli İİBF, İktisat Bölümü, Aydın, Türkiye)

Abstract

In this study, the effects of the producer price index (PPI), exchange rate, interest, and income on house sales were examined in the case of Turkey. The study was conducted using the Boundary Test (ARDL) method of analysis and spanned the period 2013:M1-2021:M10. According to the empirical findings of the study, PPI and exchange rates have a positive effect on house sales. As a result, when PPI increases by 10%, house sales rise by 7%. House sales increase by 4% when exchange rates rise by 10%. Housing loan interest rates, on the other hand, have a negative impact on housing sales, as expected. House sales fall by 0.1% when mortgage interest rates rise by 10%. These findings indicate that house sales in Turkey are impacted by inflation and exchange rates. This situation, which contradicts the law of demand, stems from the fact that purchasing a house in Turkey is regarded as a significant investment and an anti-inflationary tool. Furthermore, despite the inflationary pressures caused by the exchange rate, foreigners play an important role in the continuation of housing sales and prices.

Suggested Citation

  • Orhan SANLI & Osman PEKER, 2023. "Effect of Inflation, Exchange Rate, Interest Rates and Income on House Sales: a Case of Turkiye," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(1), pages 37-60, January.
    • Handle: RePEc:ist:iujepr:v:10:y:2023:i:1:p:37-60
    DOI: 10.26650/JEPR1104822
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    More about this item

    Keywords

    Exchange Rates; Home Sales; Interest Rates; Income; PPI JEL Classification : E00 ; F31 ; G51;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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