With the newly discovered correlation between building permits and housing prices, I wanted to put this correlation into practice more at home. Let's see how The Netherlands is doing. On Chart 1 we see that since 2006, the amount of building permits has dropped and is continuing to drop.
|Chart 1: Building Permits in The Netherlands|
A similar case is found in Belgium, where we see that the amount of building permits dropped since the top of 2006 (Chart 2). But the decline isn't as bad as in The Netherlands.
|Chart 2: Building Permits Belgium|
If we then look at the housing prices in Belgium and The Netherlands we do see a lag. 2006 marked the top in building permits, while 2008 marked the top in the housing market index in The Netherlands. This suggests that the correlation is true.
In Belgium though, the housing market is still rising, while building permits are declining. So something is not right here. Considering that building permits are dropping in Belgium, I expect that the Belgium housing market will go lower in the future.
|Chart 3: Housing market in Belgium and The Netherlands|