The Chicken Game - site development under conditions of market power on the Dutch land market

Abstract

This research explores the notion that market power might influence the rate at which houses are developed, making it an explanation for the current housing crisis in the Netherlands (Ott, Hughen & Read, 2011). Landowners who possess a significant amount of the total land supply have market power; the ability to increase prices by keeping the housing supply low (Buitelaar & Pouls, 2009). This could lead to stalled sites; sites that remain undeveloped despite being completely ‘shovel ready’ (McAllister, Street & Wyatt, 2018). The relationship between market power and stalled sites is studied. Residential development data is provided by the province of Noord-Holland and ownership data by the Kadaster. The logistic regression performed, however, suggested there be a negative relationship between market power and stalled sites. This should be stated carefully, as the operationalisation of market power results in the logistic regression not being able to account for the owners with lower amounts of market power. For these landowners it would be more rational to quickly develop their sites, for they can benefit from the low supply. A longitudinal study into this relationship is suggested for future research as well as a qualitative study into the decisions made by landowners.