A Hedonic House Price Index for Turkey

In the 2010Q1-2015Q1 period, housing prices increased 78.8 percent in Turkey, which raises a need to monitor the housing market dynamics carefully. This increase is widespread across the country where prices have even doubled in some regions. Our study performs a hedonic price adjustment for the housing market in Turkey, where we control for the price effects of improvements in observed house characteristics in time. Results show significant increases in the quality of houses sold, which in turn suggests that attributing all the price increase to a real appreciation may be misleading. In particular, we estimate that one fourth of nominal changes and one half of relative changes in house prices stem from quality improvements in general.