The role of government and financial institutions during a housing market crisis: a case study of the Netherlands

The generous mortgage tax relief enjoyed in the Netherlands and the possible existence of a house price bubble cannot explain the sharp decrease of house prices in the Netherlands in the period from 2011–2013. This sharp decline can, however, be explained by the rigorous adjustments to mortgage lending criteria after 2011. Key financial institutions in the Netherlands were more directly responsible for the deep crisis of the home-ownership market during this period. This was largely due to the specific interests of these organisations, mainly based on macro-economic considerations and the desire to enlarge the equity of the banks, which outweighed the problems on the housing market.