Are houses overvalued in the Netherlands?

Henk Kranendonk () and Johan Verbruggen ()

CPB Memorandum from CPB Netherlands Bureau for Economic Policy Analysis

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.

JEL-codes: E39 R21 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-geo, nep-mac and nep-ure
Date: 2008-04
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