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Mortgage credit and house prices: the Turkish case

S. Belgin Akçay (Faculty of Political Sciences, Ankara University, Ankara, Turkey)
Cagin Karul (Department of Econometrics, Pamukkale University, Denizli, Turkey)
Mert Akyuz (Department of Economics, Faculty of Political Sciences, Ankara Yildirim Beyazit University, Ankara, Turkey)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 23 March 2022

Issue publication date: 28 February 2023

256

Abstract

Purpose

The purpose of this study is to examine whether there is a causal relationship between mortgage credit and house prices in Turkey.

Design/methodology/approach

Granger causality test, Toda–Yamamoto causality test, Fourier Granger causality test and Fourier Toda–Yamamoto causality tests are applied.

Findings

The findings show that there is a strong one-way causality between mortgage credit and house prices and that the developments in credit markets are more decisive in the relationship between mortgage credit and house prices than the developments in the housing markets.

Practical implications

Considering a causal relationship between mortgage credit and house prices may contribute to more efficient use of the tools of both macroeconomic and microeconomic policies for the mortgage credit and housing markets in Turkey. Furthermore, by understanding the importance of the direction of causality between both dynamics, it may be possible to prevent and/or mitigate the negative effects of large house price movements on both Turkish housing and mortgage markets as well as on Turkish economy.

Originality/value

To the best of the authors’ knowledge, the contribution of this study is to examine for the first time whether the causal relationship between mortgage credit and house prices in Turkey is mutual as well as to apply four different causality tests and to compare their results for the first time.

Keywords

Acknowledgements

The authors would like to thank participants of the European Real Estate Society Conference in 2021 and the World Finance Conference in 2021 for their comments. They are also grateful to Dr. Richard Reed (the Editor) and the anonymous referees for the valuable comments that help to improve paper.

Citation

Akçay, S.B., Karul, C. and Akyuz, M. (2023), "Mortgage credit and house prices: the Turkish case", International Journal of Housing Markets and Analysis, Vol. 16 No. 2, pp. 318-335. https://doi.org/10.1108/IJHMA-11-2021-0127

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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