The Causality between Mortgage Credit and House Price: The Turkish Case


Akçay S. B. , Akyüz M. , Karul Ç.

27th Annual Conference of the European Real Estate Society, Rheinland-Pfalz, Germany, 2 - 05 June 2021

  • Publication Type: Conference Paper / Unpublished
  • City: Rheinland-Pfalz
  • Country: Germany

Abstract

Since housing is one of the most expensive commodities in Turkey as in many countries, credit and housing markets are closely linked. However, based on the literature review in this study there is no research on the relationship of credit with house price for Turkey. Thus, the study aims at examining whether there is a causal relationship between mortgage credit and house price in Turkey. For achieving this aim, we apply four causality tests for the period between 2010 and 2020 at monthly frequency: Granger causality tests, Toda-Yamamoto causality tests, Granger causality tests with Fourier approach, and Toda-Yamamoto causality tests with Fourier approach. The findings of the empirical analysis show that there is a strong one-way causality between house prices and mortgage credit and that the direction of the causality is from credit to house prices. The results of all the different causality tests reach to the identical results.