Internet searches and transactions on the Dutch housing market

ABSTRACT

We use Google searches of the word ‘mortgage’ to explain monthly housing transactions in the Netherlands in the period from 2004 until 2015. Our estimates indicate that Google searches of the previous months are significantly positively associated with housing transactions in the current month. This shows evidence that Internet search data can provide information about real market behaviour.

KEYWORDS:

• Housing market
• Internet search data
• nowcasting
• Google Trends
• Google search data

JEL CLASSIFICATION:

• E2
• E27
• R2
• R3

Acknowledgments

We are thankful to various colleagues for valuable comments. The data and code which was used to derive the results is available upon request.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Choi and Varian (2012) test the predictive value of Internet search activities on various economic activities in the US, such as car sales, unemployment claims, consumer confidence and travel destinations.

² Google defines the data as follows: ‘The numbers that appear show total searches for a term relative to the total number of searches done on Google over time. A line trending downward means that a search term’s relative popularity is decreasing. But that doesn’t necessarily mean the total number of searches for that term is decreasing. It just means its popularity is decreasing compared to other searches’. Source: Google, Last accessed 14 December 2015.

³ We take the moving average from 36 weeks before, the current week and 36 weeks in advance. Different specifications yielded similar results.

⁴ Please note that we take the average per month of the weekly search data to deal with the mixed frequencies in our time series.