Dutch house prices versus population density

Population density can have a significant impact on house prices per square meter. Generally, in areas with high population density, such as cities or urban centers, house prices tend to be higher compared to areas with lower population density. There are several reasons for this relationship:

  1. Demand and competition: High population density areas often have a higher demand for housing due to a larger number of people seeking accommodation. This increased demand creates competition among potential buyers or renters, driving up prices. Limited housing supply in densely populated areas further intensifies this effect.
  2. Land scarcity: In densely populated regions, available land for new construction or expansion is limited. As a result, developers and homeowners may face higher costs when acquiring land for housing projects. These increased land costs are usually passed on to buyers or renters, leading to higher prices per square meter.
  3. Amenities and infrastructure: Areas with high population density tend to have better access to amenities and infrastructure such as schools, hospitals, public transportation, entertainment venues, and employment opportunities. The presence of these amenities and services can increase the desirability of the area, making people willing to pay a premium for housing, thus driving up prices.
  4. Location advantages: Densely populated areas often offer proximity to business districts, cultural centers, recreational areas, and other attractions. The convenience and accessibility associated with such locations can lead to increased demand for housing, resulting in higher prices.
  5. Supply constraints: In densely populated areas, it can be challenging to expand housing supply due to limited available space for new construction. Zoning regulations, building restrictions, and other factors may further impede the development of new housing units. With a constrained supply, prices tend to rise.

It’s important to note that while population density is a significant factor in house prices per square meter, other variables such as local economic conditions, housing market dynamics, and specific neighborhood characteristics also play a role in determining housing prices. However, the relation for the regional Dutch housing situation shows a clear relation between population density and house prices per square meter as the chart below shows.

Scatter Chart