From 1604 to 1810, Amsterdam had three real estate bubbles. House prices doubled or tripled and then fell back to their initial values. Each bubble lasted decades.
In a recent working paper, “The First Housing Bubble? House Prices and Turnover in Amsterdam, 1582-1810,” Ph.D. candidate Matthijs Korevaar of Maastricht University created a home price index based on 164,000 documented house sales in Amsterdam from 1563 until 1811 . The word “turnover” in the study means “sales.”Source: Working Paper,"The First Housing Bubble? House Prices And Turnover in Amsterdam, 1582-1810," Matthijs Korevaar, 2018.
When enough of these new investors buy enough houses, those additional sales will cause house prices to increase which will again motivate investors, new and old, to buy more houses which will cause prices to increase even more and so on in a self-reinforcing upward price spiral.And it doesn’t take a large increase in the number of investors speculating on continued house price increases to move housing markets.
It seems when house prices have increased for the previous two years, some potential buyers feel confident the upward trend will continue, they feel it’s safe to pull the trigger and buy investment houses no matter how high prices are. They’re keying on the past increase in prices, not current prices levels or the economic fundamentals.