Estimation of Apartment Prices in Turkey: Regional Differences and Some Specification Issues

Abstract

Using data on the sale prices and structural characteristics of close to nine thousand apartments from around the country, we estimate several versions of a hedonic price model of the Turkish housing market. The characteristics we control for include the surface area and the number of rooms of the apartment, as well as the age of the building it is located in. We also have some information on in-house amenities such as the type of heating and the presence of a balcony. The econometric models are estimated with both the ‘sale price’ and the ‘price per square meter’ as dependent variables, using both linear and semi-logarithmic functional forms, and comparisons are made between the findings of these specifications. The models are also estimated using only the observations that come from Istanbul and the rest of the country, as it turns out that some parameter estimates differ between the two subsamples. The examination of these differences suggests that they have to do with neighborhood characteristics that we were unable to control for.