Which factors determine the development of house prices in the Netherlands?
This publication is in Dutch.
Welke factoren bepalen de ontwikkeling van de huizenprijs in Nederland?
Download (PDF document, 236.2 KB) | CPB Document 81 | 5‑04‑2005 | 42 pages | ISBN 9789058332110
Given the economic impact of the development of house prices, a better understanding of its explanatory variables is important. This document first describes the special characteristics of houses and the Dutch housing market. This is followed by a summary of empirical research on house prices for the Netherlands.
Next, estimation results are presented of an error correction model for Dutch house prices. The model explains the developments since 1980 fairly well. For about 75%, the relatively high real house price increases in the period 1992-2000 can be attributed to a strong growth in real disposable wage income and financial households' wealth (excluding stocks). Furthermore, the drop in the real interest rate and the small supply of newly built houses had an impact as well.
In the period 2001-2003, real house price increases were much smaller. This was mainly caused by a smaller increase in prosperity. Besides, in recent years owner-occupied dwellings were somewhat overvalued. The correction that followed had a downward effect on house prices as well. However, because of asymmetries, this reaction to the excessive price hike has been limited.
