Prediction of the House Price Index of Turkey: A Comparative Study of Multiple Linear Regression and Artificial Neural Network Models

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Date

2022-6-16

Author

Erdekli, Yusuf Kemal

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The housing market is accepted as the triggering force for the Turkish economy. Consequently, the fluctuation in house prices is an important point of interest for both policymakers in the government and decision-makers in the construction industry. In order to be able to monitor the movements in house prices effectively, it is important to understand the relationships between the macroeconomic parameters and house price movements. The main objective of this thesis is to predict the house price index (HPI) of Turkey using macroeconomic parameters by utilizing multiple linear regression (MLR) and artificial neural network (ANN) models. Among the 25 macroeconomic parameters commonly used in previous studies reported in the literature, 9 parameters are selected as the independent variables while predicting the house price index (HPI), which is chosen as the dependent variable, and the monthly time series data of these parameters are used for the time period between January 2010 and December 2019 to train the models. Subsequently, data from January 2020 to December 2021 is used to validate the models. The relationship between these macroeconomic parameters and house price movements is examined in detail, and consumer price index (CPI), unemployment rate (UR), and brent oil price (BOP) are found as the most significant parameters in determining the house price movements in Turkey. The developed MLR and ANN models provided a high level of accuracy in learning, generalizing, and converging the time series data and produced reliable prediction values. Model validation results revealed that the ANN model developed in this thesis has a higher predictive performance than the developed MLR model and also the ANN models developed in previous studies.

Subject Keywords

House Prices, Turkey, Macroeconomic Parameters, Multiple Linear Regression (MLR), Artificial Neural Networks (ANN)

URI

https://hdl.handle.net/11511/97935

Collections

Graduate School of Natural and Applied Sciences, Thesis

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Citation Formats

Y. K. Erdekli, “Prediction of the House Price Index of Turkey: A Comparative Study of Multiple Linear Regression and Artificial Neural Network Models,” M.S. - Master of Science, Middle East Technical University, 2022.