Moving Behaviour in the Dutch Owner Occupied Housing Market

The demand for housing services of an agent is uncertain, and changing the actual consumption involves lump sum moving costs. The model is based on an impulse control of Brownian motion. From the database ’WoON2006’ we obtain a cross-section of the actual consumption of housing services. The desired consumption of housing services is derived by applying the model in Donders et al. (2010) to income and family size data in WoON2006. We fitted the model to this cross-section in order to find the parameters of housing behaviour and the moving costs. The model is used to analyse the effects of reduction of the transfer tax that is currently paid when purchasing a new home. We find that the associated reduction in moving costs by one percent point increases the number of moves by about 3% to 10% and gives a welfare gain of around 0.1 billion euro.