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The relation between supply constraints and house price dynamics in the Netherlands

Bahar Öztürk, Dorinth van Dijk, Frank van Hoenselaar () and Sander Burgers

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: We analyze the effect of supply constraints on the dynamics of house prices in the Netherlands. In particular, we look at whether income shocks lead to stronger house price increases in regions characterized with higher supply constraints. We use a panel dataset that contains 316 municipalities over the years 1987-2016. Municipalities are divided in three equally sized groups according to the extent of supply constraints present in each municipality. Our results suggest that income shocks lead to significantly larger increases in house prices in municipalities that are relatively more supply constrained. This holds both in the short- and the long-term. The degree of mean reversion and persistence, however, do not seem to significantly differ between the three groups of municipalities.

Keywords: house prices; income shocks; supply constraints (search for similar items in EconPapers)
JEL-codes: G12 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur and nep-ure
Date: 2018-07
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