The Impacts of Housing on Economic Development

Housing is not just a shelter for population, but it is also an economic sector which creates direct and indirect multiplier effects on different sectors. With this respect, housing is evaluated as stimulant for economic development. Recent studies in last decade have emphasized the importance of housing for economy, finding an association between housing investment and economic growth. In Turkey, stateís policies have been changed and governments realized the importance of housing sector for economy after 1980ís. Housing sector was evaluated as employment generating and stimulant for other housing related sectors. Realizing the importance of housing for economy, governments gave the privilege to encourage housing construction and tried to facilitate housing production with legal and planning regulations. However, fluctuations of macroeconomic condition such as high inflation and interest rate, and encountering national and international economic depressions affected the housing market stabilization. Where there was high interest rate and inflation, it has been observed a fall in housing construction and this made negative effects on economic development. This study aims to put forward the relations between housing investment and economic development using correlation analysis in Turkey of which economy is growing. Using time series data from 1980 to 2005, housing is found to have strong effects on economic development similar to former studies.