Factors Affecting Motives for Housing Demand: The Case of a Turkish Province

Abstract

1. INTRODUCTION Housing sets out noteworthy variability with respect to consumer perceived quality and prices, while this disaggregate behavior should be properly appreciated to make an accurate assessment as a means of future housing market policies (Han, 2010). Additionally, housing is adopted as both an investment and consumption good for owner-occupiers, and therefore, basic motives of households' decisions associated with their dwellings are their investment and consumption considerations (Ozdemir-Sari, 2014). The housing sector contributes to a wide range of dimensions such like financing, upgrading, repairs, management, valuation, taxation and population (Yetgin & Lepkova, 2007). Housing sector development in the developing countries has been subject to greater internationalism and it is increasingly taking the more comprehensive approach characterized by demographical and developmental factors (Pugh, 2001). Turkey has been experiencing a rapid process of population growth and urbanization in recent years and therefore several ways of rapid housing systems were exercised to solve the housing shortage problem (Altas & Ozsoy, 1998). A housing boom was considered as the basic characteristic of Turkey's formal housing sector from the beginning of urbanization in the 1950s until the late 1970s, while during the 1950s industrialization attempts and the increasing rate of urbanization ensured an occasion of consistently increasing demand for urban and land housing. Especially, massive migratory flows to a very few metropolitian centres were the initial determinant of growth in housing demand (Baharoglu, 1995). Between 1950 and 1980, Turkey suffered from high and sustained inflation and the supply of urban land and housing was limited by financial, technical, and institutional constraints. This circumstance led to the direction of the limited government funds for subsidizing the development of industry, not housing. Particularly, public investment was less than 10 percent of total housing investment, leaving more than 90 percent to the private sector (Yonder, 1987). Before 1980, the effect of cooperatives on the production of social housing was quiet low in the formal housing sector, while their contribution was 5% of total housing supply until the 1970s, however their share in the total housing production increased to 10%-15% between 1970 and 1980 (Turk & Altes, 2013). In 1980, economic regulations by the government led to housing deficit increase and housing investment decrease. When the government policies encouraged the improvement of the housing sector, not surprisingly, investment in housing increased. In that period, the establishment of the Mass Housing Fund and remarkable changes that support new dwelling unit construction were the most prominent initiatives (Yetgin & Lepkova, 2007). Many factors can be considered to be capable of having significant impacts on housing demand such as several concerns for the future, housing investment, achieving rental income, etc. The economics of housing demand is gradually evolving over the past decades, and consequently major improvements in measuring price and income terms, the joint modelling of tenure choice, mobility and demand, the availability of large databases can be regarded as the divergent determinants of the housing demand estimates (Goodman, 2002). For instance, in any time period household making a housing preference investigates the spatial locations of each type of housing and market prices of housing types at the corresponding locations (Quigley, 1976). In addition, the housing purchase at a given time will be relevant to both recent and the further prices and incomes, due to intertemporal life-time optimization that specifies the purchase of many types of goods and high transactions costs of changing the amount of purchased housing (Goodman, 1990). The objective of this study is to determine the factors affecting the motives for housing demand using a statistical analysis. …