Stef Blok, the Minister for Housing and Civil Service, has declared that the lowest point of the Dutch housing market crisis has passed. Blok’s statement was in response to positive quarterly figures released by the NVM, the Dutch Real Estate Brokers Association, which show that the average house price has risen for the third month in a row, rebounding to a level similar to early 2003.
Blok warns against returning to the over-inflated “exploded” house prices that the market experienced at the peak of the housing boom in 2007. “There is absolutely no reason why house prices should rise faster than inflation”, said Blok.
In the last three months, there have been more homes sold in the Netherlands than in any other quarter since the crisis began in 2009. Between April and June, Dutch real estate brokers sold more than 29.000 homes, a 41 per cent increase in the number of transactions compared to the same period in 2013. According to the NVM, house prices are also 3,5 per cent higher than this time last year, with the current average purchase price for a home at 215.000 euros.
NVM chairman Ger Hukker explains that the rising number of homes sold is due to certain “market props” such as new policies making it easier for parents to transfer properties to their children. Higher rental prices and historically low mortgage rates are also driving buyers into the housing market and increasing sales. Hukker believes, however, that these factors will only provide a temporary boost.
Factors that may be hindering the boost are the lower amounts that buyers are currently permitted to borrow from banks and the number of the people hesitating to sell in order to avoid incurring a loss on a property bought during the boom. The National Mortgage Guarantee (Nationale Hypotheek Garantie - NHG) has also recently been reduced. As of this month a home buyer is only entitled to this insurance if the value of their home is less that 265.000 euros. Previously that value was 290.000 euros.
The new figures are positive, but improvements are not to be seen everywhere, according to a report by NRCQ. For example, freestanding house prices fell by 0,4 per cent in the last quarter.
There are currently an estimated 210.000 homes for sale in the Netherlands. On average they spend 402 days, more than a year, on the market. According to the NVM as many as one-fifth of the homes for sale have an asking price that is too high. These ‘hard sell’ homes have a slower turnover and increase the average selling period.
Average house prices are a clear indicator of the status of the housing market: the higher the average price, the more robust the market is in that area. In the majority of Dutch regions house prices have ceased to fall. However, according to the CBS, in the last quarter house prices actually fell in the regions of Drenthe, Zeeland and Groningen. Top performing regions were North Holland, with more than a 2 per cent average price rise, and Limburg and Overijssel, both with just under 2 per cent.
There is also a marked difference in price movements between regional areas and major cities. Randstad cities, particularly Rotterdam, Amsterdam and Utrecht experienced a more significant increase in price levels than the national average, with home prices rising more than 3 per cent in Amsterdam and Utrecht, and more than 4 per cent in Rotterdam. The Hague lagged behind with a modest increase of 1,6 per cent.
Last quarter Amsterdam experienced a significant increase in sales with real estate agencies transferring a record 2.633 properties. Currently, an average Amsterdam apartment costs 227.000 euros, around 10 per cent more than last year. Of all dwelling types, apartments saw the highest price increase of 6,9 per cent.
The average selling time of an Amsterdam property also dropped remarkably; from around 100 days a year ago, to 58 days in 2014. According to the NVM, the Amsterdam housing market may already be starting to overheat again.
Sources: Volkskrant, Parool