Foreign direct investment and housing price in The Netherlands

Foreign direct investment is a major indicator of global trade and economic growth for the country. These investments stand for a global capital and resource flow that could have a major impact on the host cities economy growth while earning a prosperous finical return. However, FDI also brings other unexpected effects, which the recipient countries may not foresee. After investment happened, this impact would gradually become part of the spatial characteristic of the investment location. Based on the previous studies, we understand that the influences of housing price have been well researched before. However, the full mechanism of how these factors work to affect housing price over spatial dimension and compositions still leaves a lot to be studied. In the Netherlands, there have been a limited number of studies conducted on the FDI roles in influencing the local housing prices. The Netherlands is currently undergoing a major rising of housing prices, contributed by the optimistic foresee of economic development with the contribution of FDI, but the relationship in-between has not yet fully understand. This research studies the effect of FDI on housing prices in the Netherlands from 2007 to 2015. Based on the inferential analysis, it is concluded that there is a relationship between FDI and housing price. With the panel regression calculated with spatial weights matrix and fixed effect model, we further investigate the relationship of close by neighbors’ influences. The results show that with an influence of FDI, different districts’ housing prices are positively correlated with each other. The investment counts from foreign countries positively relate to the investment location’s housing price.