A regime-dependent investigation of the impact of macroeconomic variables on the housing market activity in Turkey

This paper investigates the impact of macroeconomic variables on the housing market activity in Turkey covering the period from January 1992 to December 2012. To this aim regime-dependent impulse response and forecast error decomposition analysis are conducted based on a two-regime MS-VAR model. We find that M1 and interbank rate account considerable parts of the variation in the housing permits when the economy is in the stable regime. The results suggest that Central Bank might control the housing activity through the use of monetary policy variables.