A Land Market Cycle in the Netherlands

This paper develops a disequilibriummodel of land prices in the Netherlands. It shows thatthe behaviour of traded quantities and prices of Dutchland have some resemblance with a disequilibrium landmarket model developed by Søgaard. An errorcorrection model based on Søgaard’s model generatessignificant results with GDP and the real interest rate asexplanatory variables, but regrettably farm income norgovernment demand for land generate significantresults. If the model is correct, bubbles arecharacteristic for the Dutch land market, and thissuggests that there is an opportunity for Dutchgovernment to improve on the timing of buying land fornature policy.