Price and Transaction Volume in the Dutch Housing Market

Erik de Wit, Peter Englund and Marc Francke
Additional contact information
Peter Englund: Stockholm School of Economics, University of Amsterdam
Marc Francke: University of Amsterdam

No 10-039/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Housing markets typically exhibit a strong positive correlation between the rate of price increase and the number of houses sold. We document this correlation on high-quality Dutch data for the period 1985-2007, and estimate a VEC-model that allows us to study the mechanism giving rise to the correlation. The data identify the flows of new houses offered for sale as well as the number of houses sold. According to the estimated model, shocks to market fundamentals (the mortgage rate)have an immediate and significant impact on the rate of sale, little impact on the rate of entry of new houses for sale, and a gradual impact on the house prices. This pattern is consistent with a search model where buyers and sellers gradually learn about changes in market conditions.

Keywords: price-volume correlation; time-on-the-market; vector error correction model (search for similar items in EconPapers)
JEL-codes: E29 G12 G17 G21 (search for similar items in EconPapers)
Date: 2010-04-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Price and transaction volume in the Dutch housing market (2013)
Working Paper: Price and Transaction Volume in the Dutch Housing Market (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100039

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