It's the exact same where I live as well. It can only be partially explained by supply & demand. The only commonality between U.S. and Dutch public spending is debt. Same for most other developed countries. The central banks buy and sell that debt as securities, print more money into the economy and suppress interest rates to make loans cheaper. This 'extra' money should be reimbursed but ofcourse it never will because countries will only make more debt. Banks saddle people with astronomic mortgages and this drives up housing prices even further. This shit accumulates as inflation but no longer for currency but excessive housing prices that in no way reflect actual value. That is why it seems like governments can spend like a crazy person, the central banks even encourage this with negative interest rates, but the ghost of inflation just manifest in a different way.
Sort of. But with astronomical mortgages comes astronomically valuable property assets. For every $500,000 dollars to buy a house comes $500,000 worth of house. If someone needs, they can sell their house and their debt goes with it. The big danger, of course, is a decrease in housing value and negative equity.
Interest rates do matter here: due to the above, what matters is not the absolute price and consequent debt but the ability to afford monthly payments. If mortgage repayments take up 20% of salaries in 1985 and 20% in 2020, houses are just as affordable as they were. That the house value:salary ratio may have grown is neither here nor there. I find this idea that houses don't reflect actual value odd, as this seems quite like Marxist economics. Conventionally, the value of anything is what people will pay you for it, pretty much nothing more and nothing less. Gold, tractors or bananas no more have "actual value" than houses: all the gold in the world isn't worth anything if no-one wants it. The rationale of low interest rates and easy credit is simply flexibility and growth. You want to invest in something you can get the money now rather than have to save up (by which time the opportunity may well have disappeared) or sell something of value. If you're going through a tight spot and need to borrow, you can get through rather than go under. So yes, we have an economy fuelled by debt. But where that debt is backed by assets, it's often not remotely so bad as it looks.
Where I suspect there's an issue is as people invest in property, those assets become important - as per the above of the danger of a decrease in property value. The obvious interest of the government is to ensure property prices do not decline, because homeowners as an extremely large and powerful voter demographic, will absolutely hate it as they see themselves getting poorer. Consequently, I think the government has been perfectly happy with contrained development of new housing stock to keep house prices buoyant.
www.cnn.com
