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An Analysis of the Housing Market in the Netherlands

Sonderholm 72. 2133 JG Hoofddorp, The Netherlands

Housing research in the Netherlands has long been dominated by demographic orientated research. This was quite logical because of the distinctive demographic development of the Netherlands relative to other West-European countries. The rate of increase in population in the period 1960-1981 was among the highest in Western Europe. Economic influences on housing consumption have therefore long been neglected. In the 1980s, a period with declining incomes and a government policy to increase rents, suddenly economic influences came into the picture. Housing demand tends to diminish and the traditional housing shortage since the second world war seems to disappear. Rising rents can even lead to rising vacancy rates because demand diminishes and supply increases because of higher rates of return (the reverse of the consequences of rent control). This article presents a recent econometric analysis of the housing market in the Netherlands and places the results in the context of the broad, and sometimes confusing, international literature on income elasticities of housing consumption.

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