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Are houses overvalued in the Netherlands?

Author

Listed:
  • Henk Kranendonk

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Johan Verbruggen

Abstract

The movement of the level of house prices in the Netherlands between 1980 and 2007 is explainable fairly well by fundamental supply and demand factors. Empirical research has shown that the overvaluation of approximately 10% that existed in 2003 shrunk to approximately 0% in 2007. This was not caused by downward correction of house prices, but by the circumstance that the increase of the actual house price between 2003 and 2007 lagged behind the increase of the long-term value of the house price. Therefore, this does not confirm the IMF's recently published research results, indicating that approximately 30% of the house price increase between 1997 and 2007 cannot be explained by fundamental factors.

Suggested Citation

  • Henk Kranendonk & Johan Verbruggen, 2008. "Are houses overvalued in the Netherlands?," CPB Memorandum 200, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:memodm:200
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    File URL: https://www.cpb.nl/sites/default/files/publicaties/download/memo200.pdf
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    Cited by:

    1. Peter Neuteboom & Dirk Brounen, 2011. "Assessing the Accessibility of the Homeownership Market," Urban Studies, Urban Studies Journal Limited, vol. 48(11), pages 2231-2248, August.
    2. de Wit, Erik R. & Englund, Peter & Francke, Marc K., 2013. "Price and transaction volume in the Dutch housing market," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 220-241.
    3. Kroot, Jan & Giouvris, Evangelos, 2016. "Dutch mortgages: Impact of the crisis on probability of default," Finance Research Letters, Elsevier, vol. 18(C), pages 205-217.
    4. Christophe André, 2010. "A Bird's Eye View of OECD Housing Markets," OECD Economics Department Working Papers 746, OECD Publishing.

    More about this item

    JEL classification:

    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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