MACROECONOMIC EFFECTS OF COVID-19 ON THE TURKISH REAL ESTATE MARKET

Abstract

This study investigated the relationships between house sales and macroeconomic variables such as housing interest rate, inflation, exchange rate, aggregate exports, and industrial production in Turkey using the multiple linear regression model. In order to detect the effects of Covid-19, monthly data are divided into two groups pre-Covid-19 (2018M1-2020M2) and during the Covid-19 period (2020M3-2021M9) and two different models are formulated. The findings of the study are summarized as follows: (i) Inflation, exchange rate, and industrial production variables are excluded from both models as they are statistically insignificant and caused deviations in the assumptions of the multilinear regression model. (ii) It is found that aggregate exports in Turkey are positively related to housing sales, while house interest is negatively related to house sales. (iii) It is discovered that the negative effect of housing interest rates enhanced during the Covid-19 period. (iv) On the other hand, it is uncovered that the positive effect of aggregate exports decrease during the Covid-19 period. These findings strengthen the importance of increasing the competitiveness of Turkish companies by developing the production of high-tech products. This factor will increase the export rate of the country and contribute to the decrease in interest rates. Keywords: House Sales, House Interest Rates, Aggregate Exports,