Reinvestment Behaviour and Policies in Housing
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Date
2011-02-10
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Abstract
Reinvestment decisions in housing are made by independent households in the free market,
rather than by some authority. Although a micro level activity, households’ decisions in
reinvestments often have broader implications at the macro level. Some of these implications
can be observed directly in the built environment, whereas others are to be traced in the
overall economy. Developing an understanding of households’ reinvestment behaviour and
providing information on this issue could contribute to the monitoring of the economic
system, as well as to urban decision-makers and planners in designing finer policies and tools
of intervention in relation to problems of the housing stock and neighbourhood environments.
The study aims to identify problems in reinvestment issues, factors in household reinvestment
decisions, adjustment strategies of households, scale and types of reinvestment work, and
motivation underlying the investments so as to explore macro implications of reinvestment
behaviour. Current levels of investments in urban areas have increased to such significant
magnitudes in Turkey that its implications for the overall economy have to be taken into
account. Despite four decades of research and practice history in the world, reinvestment
issues have been ignored in Turkey.
The findings of this study reveal that although substantial capital and resources are engaged in
reinvestment activities in Turkey, there are households who are unable or unwilling to
reinvest to their dwellings, or conversely there are dwellings that are unlikely to receive
reinvestments. These are the lowest income households, the rental stock, or dwellings located
in the neighbourhoods of poor environmental quality, and flats in apartment blocks where
common areas are not maintained. With another point of view, reinvestment decisions have
implications in the depreciation of the housing stock. The findings display that in the Turkish
case reinvestments in existing housing stock are significant components of housing
investments, households’ reinvestment expenditures have implications in the construction
sector and thereby in the overall economy, and households’ reinvestments help to adjust
housing consumption with regard to the current needs and trends, and act as supply
adjustment mechanisms in existing housing stock and neighbourhoods. The findings indicate
a possible set of policy issues in the more efficient operation of the housing markets.
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Keywords
residential reinvestment, household behaviour, housing policy, Turkey