The Impact of Social Housing Program on the Demand for Housing in Turkey: A Cross-Section Analysis

Abstract

This paper analyses the demand for housing in Turkey, incorporating public housing provision. The housing provision by Housing Development Administration of Turkey (HDA-the original name is Toplu Konut İdaresi-TOKİ) has been argued whether it effectively provides social housing for the poor. The question has been investigated by a model of demand for housing. A model of housing is established, wherein the demand for housing is assumed to be a function of income, price and population. Foreigners’ demand and the ratio of mortgage credits have been included as explanatory variables. To test the impact of housing provision by HDA, the ratio of total houses provided by HDA has been included in the model. The model has been tested by provincial-based data. The results show that the regional income and wealth, population, and foreigners' demand have positive impact, and the price has negative impact on the demand for housing, while the mortgage loans appeared to be insignificant. Public housing towards low-income groups does not create any impact on the housing market, while the ones targeting middle-income groups seem to substitute 15% of market supply. The originality of this paper is twofold: Firstly, the paper establishes an original model to analyses the demand for housing in Turkey. Secondly, the impact of HDA housing is of value to analyze to what extent the Agency is a vehicle for social housing.