The Political Economy of Housing Financialization in Turkey: Links with and Contradictions to the Accumulation Model

Abstract

Financialization influenced the Turkish economy and housing industry mostly through financial liberalization moves and soaring capital inflows. It both increased household liabilities and mortgage loans dramatically and offered various facilities for the housing industry. Relevant legal regulations not only helped the Turkish housing industry prosper but also eased its integration into the national and global financial system. In addition, political implications constituted a strong motivation for governments to attach special importance to the housing industry. I examine housing financialization as an integral part of the accumulation model of the Turkish economy and argue that the housing industry lies at the very heart of the contradictions of this model. The large-scale capital inflows both intensified the dependency on foreign resources and increased the role of the domestic demand. This is the main contradiction of the accumulation model; it manifests itself in the interest rate dilemma and is also critical for housing financialization in Turkey because the characteristics of this model are especially valid for the housing industry. Moreover, not only do the contradictions of the accumulation model disrupt the housing industry, but also the characteristics of the housing industry contribute to the disruption of this model.