THE DEMAND FOR NEW HOUSING IN TURKEY: AN APPLICATION OF ARDL MODEL

This study provides empirical estimates for new residential homes demand function in Turkey using the time series data for the period 1964-2004. An aggregate demand function for new private dwellings in Turkey is formed and is estimated using bounds testing cointegration procedure proposed by Pesaran et al. (2001) to compute the short and long-run elasticities of income and price variables. This study also implements CUSUM and CUSUMSQ stability tests on the estimated new housing demand function. The empirical results indicate that income is the most significant variable in explaining the demand for new housing in Turkey and there exists a relatively stable new housing demand function.