(The Effects of House Prices on Resource Allocation and Income Distribution)
The impact of developments in the housing market on the economy as a whole was better understood with the global economic crisis that started in 2008. In the aftermath of this crisis, housing markets have become one of the markets that policymakers and the public have focused on. Housing market developments have important "long-run" economic and social consequences. Long-term increases in housing prices may lead to speculative price movements, so-called "bubbles", and may also have a significant impact on economic growth and the distribution of national income. When evaluating developments in the housing market, the focus should be on long-term effects rather than short-term effects. In Turkey, house prices have been rising steadily and realistically for a long period. House prices have been rising well above consumer prices. This increase has been realized at increasingly higher rates. Prolonged high increases in housing prices increase the profitability of housing investments. In a situation where housing is an attractive alternative among long-term investments, savings in the country are shifted to housing, which can be characterized as non-productive capital. This situation prevents sufficient investment in areas such as education, industry, and high technology, which are necessary for sustainable growth. On the other hand, evidence from recent studies reveals that the housing market is one of the important factors that determine how the increase in welfare resulting from economic growth is shared among the citizens of the country. In the long run, the excess of housing rents over economic growth leads to inequality in the distribution of wealth in the economy in favor of homeowners. Not only policies directly targeting the housing market but also policies implemented in many other areas affect the housing market. Developments in the housing market affect many areas from resource allocation to income distribution. For this reason, it is important to evaluate the effects of all policy designs on housing markets.
