Capitalization effects in the Netherlands Estimating the effect of property tax rates on housing prices

This thesis estimates the capitalization effect across Dutch municipalities, by using a fixed effect model with the average housing prices and property tax rates as the main variables and the municipal spending per capita as a control variable. The data consists of these three variables for the years 2010 to 2018. With this data and a regression model including time fixed effect the main question: “What effect does the Property Tax rate have on the average housing prices across Dutch municipalities?” was answered. The results are in line with the existing literature and can be interpreted as follows. Every percent the property tax rate is changed, the average housing price changes with -0,1395 percent. The estimation is statistical significant at the one percent level. The estimation does have some threats due to the variables and possible reverse causality.