An Econometric Analysis of Determinants of House Rents in Istanbul

Abstract

In this study, the hedonic pricing model, demonstrating the relationship between residential properties and housing rentals and based on revealed preference, has been estimated by the spatial quantile regression method. The data set collected for each housing rental consists of cross-sectional data of the variables such as housing size, number of bathrooms, housing age, distance dummies etc. Additionally, spatial factor providing to measure the direction and intensity of the externality and interaction between locations, have also been added to the model. The findings show that the spatial effect is a statistically significant and it has a positive impact on housing rental prices. Proximity to the Trans European Motorway has a diminishing effect on housing rents while housing size, multiple bathrooms, appliances and security presence, ease of access to an important means of transport such as metro increase them. Although housing and heating type are the factors that could affect housing prices, a remarkable point is that these two factors is not effective on housing rents. The results of the study provide important clues about the functioning of the real estate market in Istanbul.

Keywords: housing rents, hedonic pricing model, quantile regression