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Roof or real estate? An agent-based model of housing affordability in The Netherlands

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  • Tarne, Ruben
  • Bezemer, Dirk

Abstract

Housing shortages in monetary economies are defined by affordability, which is the balance between income, savings and borrowing to access housing on one hand and purchase prices and rents, providing access, on the other. Yet analysis often confuses (monetary) affordability with (real) supply shortages. In a heterogeneous-agent housing market model calibrated on survey data, we analyse the housing affordability crisis in the Netherlands since around 2015. We find trade-offs between shocks to the housing supply, to interest rates and to banks’ loan-to-value norms by estimating their effects on house prices. Financial and monetary policies are alternatives to supply responses in reducing cyclical house price peaks and average house prices and increasing affordability.

Suggested Citation

  • Tarne, Ruben & Bezemer, Dirk, 2025. "Roof or real estate? An agent-based model of housing affordability in The Netherlands," Structural Change and Economic Dynamics, Elsevier, vol. 72(C), pages 163-178.
    • Handle: RePEc:eee:streco:v:72:y:2025:i:c:p:163-178
    DOI: 10.1016/j.strueco.2024.11.014
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