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Do regional house prices converge? Evidence from a major developing economy

Author

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  • Aytul Ganioglua
  • Unal Seven

Abstract

This paper analyzes the long-run convergence of regional house prices in a major developing country, Turkey. Using a non-linear time-varying factor model and quarterly hedonic house price data from 2010 to 2018, we find that house prices do not converge across 26 regions of Turkey. Results reveal that the regions can be grouped into seven convergence clubs and one divergent club, confirming the Turkish housing market’s heterogeneity and complexity. We extend the analysis to explore the possible factors driving the convergence clubs. We find that income, population, education, unemployment, being in an earthquake zone, and inflow of Syrian refugees are significant driving forces in explaining convergence club formation. These outcomes will benefit home buyers/sellers, investors, regulators, and policymakers interested in analyzing the dynamic interlinkages among house prices and the effects of shocks originating from the regional housing markets in developing countries.

Suggested Citation

  • Aytul Ganioglua & Unal Seven, 2021. "Do regional house prices converge? Evidence from a major developing economy," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 21(1), pages 17-24.
    • Handle: RePEc:tcb:cebare:v:21:y:2021:i:1:p:17-24
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    Citations

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    Cited by:

    1. Umut Unal & Bernd Hayo & Isil Erol, 2022. "Housing Market Convergence: Evidence from Germany," MAGKS Papers on Economics 202244, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Mateusz Tomal, 2022. "Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals," Empirical Economics, Springer, vol. 62(4), pages 2023-2055, April.
    3. Rajesh Raj & Rath D.P., 2022. "House Price Convergence: Evidence from India [Convergence des prix des logements : le cas indien]," Working papers 893, Banque de France.
    4. Belloc, Ignacio, 2024. "Family house prices in the US: Convergence clubs by county (1975-2022)," MPRA Paper 121487, University Library of Munich, Germany.
    5. Raj Rajesh & Deba Prasad Rath, 2023. "House price convergence: evidence from India," Asia-Pacific Journal of Regional Science, Springer, vol. 7(3), pages 721-747, September.

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