The Dutch housing market and the pandemic: A quantitative analysis on the effect of COVID-19 on housing prices in The Netherlands

The COVID-19 pandemic had an immense economic and social impact. Dutch Gross Domestic Product shrunk with about 3.7 percent in 2020, which was as severe as the credit crisis in 2011. People got sick or died because of the virus, workers were strongly advised to work from their residence and consumption amenities had to close their doors to limit the spread of COVID-19. Although the economy struggled, Dutch housing prices continued to increase during the pandemic. Home preferences did appear affected by COVID-19. As working from home became the norm, households valued residential space more, and thus moved towards non-urban areas where houses have more space. This effect is know as the Donut-effect. The answer to the research question: To what extent has the COVID-19 pandemic affected housing prices in The Netherlands? provides statistically significant evidence that COVID-19 has had a positive effect on overall Dutch housing prices. This thesis also provides statistically...Show moreThe COVID-19 pandemic had an immense economic and social impact. Dutch Gross Domestic Product shrunk with about 3.7 percent in 2020, which was as severe as the credit crisis in 2011. People got sick or died because of the virus, workers were strongly advised to work from their residence and consumption amenities had to close their doors to limit the spread of COVID-19. Although the economy struggled, Dutch housing prices continued to increase during the pandemic. Home preferences did appear affected by COVID-19. As working from home became the norm, households valued residential space more, and thus moved towards non-urban areas where houses have more space. This effect is know as the Donut-effect. The answer to the research question: To what extent has the COVID-19 pandemic affected housing prices in The Netherlands? provides statistically significant evidence that COVID-19 has had a positive effect on overall Dutch housing prices. This thesis also provides statistically significant evidence that COVID-19 has likely driven a Donut-effect in The Netherlands, where households from the urban, ’Randstad’ provinces have moved towards other Dutch provinces outside the ’Randstad’ due to COVID-19. Compared to pre-pandemic housing prices, housing prices in the ’Randstad’ have decreased with 1.2 to 1.6 percent compared to the non-’Randstad’ provinces. The effect is reversed for the non-’Randstad’ provinces, where housing prices have increased with 1.2 to 1.6 percent.Show less

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The Dutch housing market and the pandemic: A quantitative analysis on the effect of COVID-19 on housing prices in The Netherlands