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Border Effects in House Prices

Author

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  • Micheli, Martin
  • Rouwendal, Jan
  • Dekkers, Jasper

Abstract

We estimate the effect of the Dutch-German border on house prices. In the last 40 years the development of house prices in the Netherlands and Germany has been substantially different. While the Netherlands have been hit by two real estate cycles, prices in Germany have been extraordinary stable. We develop a model for studying house prices and the impact of the border. Then we study the development of Dutch house prices close to the German border in the period 1985-2013. Next, combining German and Dutch real estate datasets, we study the jump in the housing price occurring at the border. Using different estimation strategies, we find that ask prices of comparable housing drop by about 16% when one crosses the Dutch-German border. Given that price discounts from the last observed asking price are substantially larger in Germany, we interpret our findings as indicating the willingness of Dutch households to pay up to 26% higher house prices to live among the Dutch.

Suggested Citation

  • Micheli, Martin & Rouwendal, Jan & Dekkers, Jasper, 2014. "Border Effects in House Prices," Ruhr Economic Papers 511, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:511
    DOI: 10.4419/86788586
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    2. Hahn, Anja M. & Kholodilin, Konstantin A. & Waltl, Sofie R., 2020. "Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin," Department of Economics Working Paper Series 308, WU Vienna University of Economics and Business.
    3. Darius Kulikauskas, 2015. "Measuring fundamental housing prices in the Baltic States: empirical approach," ERES eres2015_31, European Real Estate Society (ERES).
    4. Dominik Engel & Philip Gärtner & Hans-Joachim Linke, 2021. "Der Zusammenhang zwischen Wohnungsgröße und Miethöhe in Deutschland und dessen Einfluss auf die Projektentwicklung [The correlation of apartment size and rent in Germany and its influence on projec," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 7(2), pages 99-119, October.
    5. Anja M. Hahn & Konstantin A. Kholodilin & Sofie R. Waltl & Marco Fongoni, 2022. "Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin," Discussion Papers of DIW Berlin 1999, DIW Berlin, German Institute for Economic Research.
    6. Jacobs-Crisioni, Chris & Koomen, Eric, 2017. "Population growth, accessibility spillovers and persistent borders: Historical growth in West-European municipalities," Journal of Transport Geography, Elsevier, vol. 62(C), pages 80-91.

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    More about this item

    Keywords

    house prices; European integration; border effects;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • F15 - International Economics - - Trade - - - Economic Integration
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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