Urbanization and housing market dynamics in Türkiye's reclassified cities after the metropolitan reform: Quantile-based insights

This paper examines how house price growth responds to urbanization, demographic and economic conditions, and housing market dynamics across regions differentially exposed to Türkiye's metropolitan reform under Law No. 6360 over the period 2013–2023. The reform reclassified affected provinces as fully urban, creating a structural break in official urbanization measures by eliminating variation in rural population shares. To address this discontinuity, we construct continuity-adjusted urban–rural population series based on pre-reform classifications. Using annual data, we estimate fixed-effects and Method of Moments Quantile Regression (MMQR) models to analyze both average effects and distributional heterogeneity in housing price growth. The results reveal a clear divergence in the relationship between urbanization and house price growth. In reform-exposed regions, urbanization is negatively associated with price growth, with stronger effects at higher quantiles. In contrast, the relationship is positive in non-exposed regions and statistically significant at the middle and upper quantiles. The findings suggest that these differences are linked to variations in housing market structure. While higher transaction intensity is associated with lower house price growth, resale activity amplifies the relationship between urbanization and housing prices. Overall, the study highlights the importance of measurement consistency in urbanization analysis and shows how administrative reclassification can obscure underlying housing market dynamics. The results further demonstrate that regional heterogeneity and market structure play a central role in shaping housing outcomes.