Assessing Dutch housing cycle and near-term market prospects

Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>This study is a practice undertaking examining three main concerns that currently dominate Dutch housing market debate: how long is the cycle, will the current house price inflation continue and is housing market in a bubble. With national house prices reaching record highs across all major cities, future market prospects became a topic of significant debate among policymakers, investors and the populace.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>A triangulation of well-established academic methods is used to perform investigation. The models include Hodrick-Prescott (HP) filter, volatility autoregressive conditional heteroskedasticity (ARCH approximation) and right tail augmented Dickey–Fuller (Rtadf) test (bubble screening technique).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>Interestingly, over the years from 1985 to 2019 research period, filtering extracts only one Dutch national housing cycle. This is a somewhat distinct characteristic compared to other advanced Western economies (inter alia the UK and the USA) where markets tend to experience 8- to 10-year gyrations. Volatility and Rtadf test suggest that current house prices in most Dutch cities are in excess of historical averages and statistical thresholds. House price levels in Almere, Amsterdam, The Hague, Groningen, Rotterdam and Utrecht are of particular concern.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>Retail investors should therefore be cautious as they are entering the market at the time of elevated housing values. For institutional investors, those investing in long-term, housing in key Dutch metropolitan areas, even if values decline, is still an attractive investment conduit.</jats:p> </jats:sec>

House price index (HPI) and Covid-19 pandemic shocks: evidence from Turkey and Kazakhstan

“…Despite, there are mixed findings on real estate pricing in general; some studies reveal that pricing behaviour is asymmetric (Annamalai et al , 2014; Cheng et al , 2019; Filotto et al , 2018), some studies found symmetric pricing behaviour of Covid-19 pandemic shock is also assumed to be an obstruction to the global economy which may be driven the negative expectation of investors’ income on HPI and could be further explained by rockets and feathers effects in support of the uneven movement of pricing behaviour. Obviously, series of studies investigated HPI from different perspectives due to undisputable contributions of real estate sector to the growth and development of national economy in particular and global economy in general (Annamalai et al , 2014; Apergis, 2015; Barros et al , 2012; Jadevicius and Gool, 2020; Mosquera et al , 2020; Tanrivermiş, 2020) and changes in the housing market could be dramatically observed (Kaya et al , 2019). Furthermore, findings on housing pricing behaviour remain inconclusive, therefore, related studies on asymmetric and symmetric of real estate pricing level discussed in the next two subsequent sections.…”

“…Besides that, during the Covid-19 pandemic, Turkey housing demand increased by about 23.5% (624,769 house units sold) (Global Property Guide, 2020; www.aa.com.tr, 2020), this is an indication for better future demand in the housing market of Turkey. Jadevicius and Gool (2020) reported that as at the time of conducting their research during Covid-19 pandemic, Dutch house price remains resilient.…”

“…Despite that the unemployment rate is outside the scope of this study, a noticeable change has been documented in several countries regarding the increase in the unemployment rate during Covid-19 pandemic in both developed and developing nations. Unemployment rate increases as at three months after the Netherlands enter into Covid-19 pandemic period (Jadevicius and Gool, 2020). As of February 2020, the unemployment rate in both cities and towns of China increases by 0.9% due to Covid-19 pandemic shocks.…”

“…House price index (HPI) is a real estate related financial asset and real estate sector contributes substantially to the economic growth and development of several countries such as Turkey economy (Kaya et al , 2019; Tanrivermiş, 2020), Australia economy (Gholipour et al , 2019; Wang et al , 2017), India economy (Annamalai et al , 2014), Portugal economy (Mosquera et al , 2020) and Netherland economy (Jadevicius and Gool, 2020). In general, the role of real estate sector is indispensable to the economy of any nation (Abidoye et al , 2019) and becoming essential investment tool for individuals and administrations (Kaya et al , 2019).…”

“…This is because the majority of developed and developing countries exercised temporary economy lockdown for the period not less than 3 months which prevented proper use of the real estate sector in particular such as retails; hospitality; commercial; and industrial. It was reported that Netherland economy became contracted after the third month of Covid-19 pandemic due to businesses closed down (Jadevicius and Gool, 2020). Majority of those who used the real estate for residential purpose are unable to settle their rental due to layoff or inactive business activities.…”