Evolution of Home Ownership of Households in Turkey

Abstract

Home ownership rate has been declining steadily since 2004. This decrease is remarkable during a period when the construction sector is growing and that growth is reflected to the house sales. In this study, the reasons behind the decline in the home ownership rate are examined with descriptive statistics and econometric analysis using data from Household Budget Survey. The results show that the probability of home ownership of households is positively related to income level and age and negatively related to price-income ratio, price-rent ratio as well as female household head. On the other hand, when the responsiveness of home ownership to interest rate is analyzed by group of income levels of households, it is observed that households in the upper income level quintile are more responsive to interest rates than those in the lower income level quintile. This indicates that some of the house purchases may be made by the upper income level group for investment purposes and that households in low-middle income level quintiles are not sensitive to interest rates. In other words, the surge observed in house sales in recent years cannot be observed in home ownership rates. Therefore, it is believed that policies such as increasing the income assurance and public housing projects where the down payment and monthly payments are kept low, will be beneficial in order to increase the home ownership of low and middle income groups of households.