Some parts of this booming market would be related to environmentally/socially disturbing rent-seeking activities and create even low-tax profit heaven for some market participants such as constructors/developers, investors, and brokers. Growing transaction motives in Turkish housing market have resulted in a dramatic rise in demand, supply, leveraged sales, and prices in recent years. The fundamentals may intuitively suggest a justification for the recent house price inflation, however, several other metrics spark fears that a bubble may be present. More importantly, as the motivation of the study (see, “Appendix 2”), we also choose Turkey due to an interesting paradox. First, Turkey has the largest housing market in Europe in terms of house sales volume during 20 period except Russia (Hypostat, 2019) and perceived as the successful growth story as the emerging housing market in recent years (see, Coskun, 2011). Turkish housing market deserves more attention for some reasons. To this end, our analysis is intended to either reject the claim of the presence of a housing bubble or confirm on an ex-post basis its presence, or alternatively identify an on-going bubble for the Turkish housing market. The aim of this paper is to assess the prevailing bubble risk for the Turkish housing market by utilizing data sets for the period of 2006–2018. This study explores whether bubble concern in Turkey has a reliable background. Turkey has long been in the spotlight of housing bubble analysts. GFC implies that developed countries may be more prone to property bubbles, but empirical literature also suggests that emerging economies may face some property bubble cases, as well. Literature suggests that bubble psychology also works in real estate observed as the skyrocketed prices during Japan's property bubble in 1990’s, Asian Financial Crisis (1997–1998) and US subprime mortgage crisis (2007–2010). This market psychology may create an artificial price structure and a marketplace for (non-) financial assets. As mostly observed, short-sighted politics and mainstream media, perhaps unintentionally, support the evolving of bubble. Bubbles generally follow an interesting psychological path with various behavioral patterns arising from personal perceptions to social hysteria. The role of price inflation of properties in the 1929 Crisis is still in question (see, Glaeser, 2013), but Global Financial Crisis (GFC) of 2008 clearly reveals that property bubbles may trigger a full-fledged financial crisis in a global scale. ( 2018) found the presence of periodic, partially collapsing speculative bubbles in the market for agricultural land in England during the period of 13. In addition to well-known bubble episodes such as, seventeenth and eighteenth century bubbles in Holland (Tulipmania), in England (South Sea bubble), and in France (Mississippi bubble), Bell et al. Literature reveals that financial and real estate bubbles are not new phenomena.
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