September 5, 2007

Housing supply in the Netherlands

Woningaanbod reageert niet op ontwikkeling huizenprijzen

Press release
In Nederland blijkt de ontwikkeling van huizenprijzen nauwelijks van invloed te zijn op het aantal woningen dat jaarlijks wordt gebouwd, of op de kwaliteit ervan. Dit is het gevolg van verschillende vormen van overheidsingrijpen op de woning- en de grondmarkt.

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Wouter Vermeulen
Dick Morks

In spite of a growing recognition of the importance of supply conditions for the level and volatility of house prices, empirical work on housing supply outside the US is scarce. 

This paper considers various measures of housing supply in the Netherlands, where real house prices have roughly tripled since 1970. Besides the volume of investment in residential structures and new housing construction in units, we derive time series of structure and location quality in a hedonic analysis.

Each of these variables appears to be almost fully inelastic with respect to house prices in at least the short to medium long run. Further analysis of the quality of location index shows that conventional models of competitive land and housing markets cannot account for these findings. However, they may be well explained in terms of the rather extensive body of interventions by the Dutch government.


Wouter Vermeulen
Jan Rouwendal

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