Aiming to investigate the economic factors that are associated with the development of a housing bubble
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2020-12-15
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en
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The housing prices in the United States and the Netherlands have been growing after the crisis in 2007. Until the crisis in 2007, house prices also increased. According to Boelhouwer (2017) a bubble in a market is when house prices does not reflect their fundamental value. This thesis uses three methods in order to calculate whether there is a bubble and which variables influencing the house market prices, which is done by a regression method. The present value method is calculating the fundamental value of houses, and those were compared with the actual value. Also, the house price–income ratio and the price–rent has been used in order to calculate if there are any bubble in the market. According to Bourrassa (2019) and Case and Shiller (2003), the actual value can’t exceed the fundamental value by 20%. I conclude that there was no bubble in the United States in the last 25 years, but in the Netherlands, there was a bubble in front of the crisis of 2007. The United States is heading to a bubble in 2018, because the differences between the fundamental and actual value is rapidly increasing over time since 2012.
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Faculteit der Managementwetenschappen