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Housing affordability trends and challenges in the Turkish case

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Abstract

This paper examines the trends and challenges of housing affordability in the Turkish case. Concurrently, it questions the use of conventional affordability measures in a developing country context. Survey of Income and Living Conditions is employed to examine the housing affordability through ratio, residual income, and subjective approaches. The results reveal that there is a weak agreement between different approaches in identifying the affordability problem in the Turkish context, and subjective approach is a promising method for a thorough understanding of the issue. Findings also display an improvement in housing affordability in the country during the observed period. This improvement is attributed to the high housing output created in the country as well as the consistent increase in GDP per capita levels, particularly in the last 15 years. Multivariate analysis displays that low-income households, tenants, households who identify problems with the dwelling unit and the neighbourhood quality, households living in socioeconomically developed regions and regions experiencing housing shortages are more likely to report heavy housing cost burden. One of the conclusions of the study is that defining and measuring housing affordability itself is a challenge in the Turkish case. The study also concludes that alternative policies should be developed to the current ones encouraging access to homeownership for low-income households, considering that affordability of running costs could even be a problem for low-income owner-occupiers in some cases.

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Fig. 1

Source: OECD, National Accounts Statistics (2017) and TURKSTAT, Building Permit Statistics (www.turkstat.gov.tr)

Fig. 2

Source: Authors’ own calculations from the raw data of the SILC 2006, 2009, and 2014

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Notes

  1. Central Bank of Turkey (TCMB) has been publishing house price indices since 2010. The raw data can be accessed through the Bank’s website: http://evds.tcmb.gov.tr/index_en.html

  2. In 2016, for the first time in the country, a regulation has been enacted with the aim of encouraging household savings for home purchases. Through this regulation, state provides partial financial support to first-time home buyers for mortgage down payment, if they save in a bank account for housing for three years before the home purchase.

  3. See Sunega and Lux (2016) for a detailed discussion of this issue.

  4. See Li (2014) for a detailed investigation of trends on housing affordability research in 1990-2013 period.

  5. Reidin, a real estate information company, has recently started to publish housing and rental affordability indices for Turkey.

  6. In projects where poor households are targeted, TOKİ undertakes the construction work only, the rest of the process is executed by the Ministry of Family and Social Policies.

  7. According to the official records of TURKSTAT, as of 2016, there are 22 million 206 thousand households in Turkey.

  8. According to the above mentioned research, 12.3% of homeowners borrowed money from other private sources such as friends and relatives, whereas 10.3% of them borrowed from their family members. See also Sarıoğlu-Erdoğdu (2010) for a detailed discussion on the dynamics of becoming home owner in Turkey.

  9. In 2014 SILC data, households who receive housing allowances constitute 0.1% of all households.

  10. Households living in lodgements and households occupying a dwelling owned by their parents or relatives are not considered in this study.

  11. In this study, rather than EU-SILC data, national SILC data is employed. national data includes all of the variables collected by TURKSTAT whereas in EU-SILC data some variables are removed or changed for confidentiality, and some variables are calculated and added.

  12. For more information on the square root method refer to OECD note on equivalance scales http://www.oecd.org/eco/growth/OECD-Note-EquivalenceScales.pdf

  13. TURKSTAT, based on equivalised income, calculates 4 different relative poverty line depending on the 40, 50, 60, and 70% of the median income.

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Acknowledgement

The data employed in this study is Survey of Income and Living Conditions of TURKSTAT for 2006, 2009, and 2014. This data is accessed through a research project entitled ‘Housing Affordability and Measurement Methods’, funded under the Scientific Research Projects of Middle East Technical University (SRP: 08-11-2016-036). The authors thank the anonymous reviewers for their helpful comments on the previous version of the paper.

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  1. Department of City and Regional Planning, Faculty of Architecture, Middle East Technical University, Üniversiteler Mahallesi, Dumlupınar Bulvarı No:1, 06800, Çankaya, Ankara, Turkey

    Ö. Burcu Özdemir Sarı & Esma Aksoy Khurami

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  1. Ö. Burcu Özdemir Sarı
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Correspondence to Ö. Burcu Özdemir Sarı.

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The data that support the findings of the current study are available from Turkish Statistical Institute (http://www.turkstat.gov.tr) but restrictions apply to the availability of these data, which were used under license for the current study, and so are not publicly available. Data are however available from the authors upon reasonable request and with permission of Turkish Statistical Institute.

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Özdemir Sarı, Ö.B., Aksoy Khurami, E. Housing affordability trends and challenges in the Turkish case. J Hous and the Built Environ 38, 305–324 (2023). https://doi.org/10.1007/s10901-018-9617-2

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