Housing prices have been rising fast in the West of the Netherlands in the last five years. However, mortgages outstanding have remained flat, raising the question of what has driven the increase. Evidence suggests that housing supply constraints have, this time around, played a role in pushing the house prices up.
This article examines whether there are regional differences in house price growth within European countries and find a stronger cyclical pattern in capital cities compared to other regions, indicating a clear rationale for regional-level tools. The authors recommend using macro-prudential measures at a regional level, in particular loan-to-value and debt-to-income limits, to dampen the housing boom-bust cycle.