House Prices and Turnover in Amsterdam, 1582-1810∗
The First Housing Bubble? House Prices and Turnover in Amsterdam, 1582-1810∗ Matthijs Korevaary This draft: December 8, 2018 Abstract This paper uses the setting of historical Amsterdam to investigate the origins of booms and busts in housing markets. Based on archival data from more than 164,000 property transactions, I discuss the structure of the Amsterdam housing market and construct an annual house price (1604-1810) and turnover (1582-1810) index. I document the existence of various boom-bust cycles, and show that these were characterized by the same four features as modern cycles: momentum in prices, excess volatility of prices relative to fundamentals, but reversion over the longer run, and a dynamic relationship between turnover and prices. Exploiting exogenous shocks in investor demand for housing, I show that excess liquidity can be a major driver of housing cycles, in particular when accompanied by specula- tive behavior of investors. Changes in the availability of mortgage credit are not required for the creation of booms and busts: housing cycles appear in Amsterdam despite inactivity in its mortgage markets. Keywords: house prices, turnover, asset bubbles, urban economic history JEL Codes: G12, R31, N23, N93 ∗I want to thank Bram van Besouw, Piet Eichholtz, Rik Frehen, Oscar Gelderblom, Ad Knotter, David Ling, Peter Koudijs, Jean-Laurent Rosenthal, Tim van der Valk (discussant), seminar participants at the University of Florida, University of Bonn, Utrecht University and Maastricht University, and conference participants at the Cliometric Society Annual Meeting, World Economic History Congress, EEA Annual Meeting for helpful comments and / or providing data. Special thanks go to the Amsterdam City Archives, in particular Harmen Snel, and its volunteers, for the collection of the transaction data and for smoothly dealing with various requests for archival data.
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