House prices in the Netherlands continue to fall
The latest statistics from CBS show that existing owner-occupied dwellings in the Netherlands were on average 1,7 per cent cheaper in February 2014 than in February 2013.
This year-on-year price drop was greater than the one that occurred in January, which saw house prices fall by 0,5 per cent. This current level is the same as 11 years ago and over 20 per cent less than the record house price level registered in August 2008.
House sales stronger
While house prices have stayed far below pre-crisis levels, house sales last year increased to match 2008 figures.
This trend is continuing into 2014, with the first two months of this year showing an increase in house sales of 34 per cent relative to the previous year.
CBS attributes this increase to changes in regulations concerning mortgages in the Netherlands brought in on January 1, 2013, that resulted in fewer homes being sold at the beginning of last year.
These increased sales weren’t all good news, however, as many homes sold in the Netherlands in the last year were sold at a loss, with the worst affected area being Flevoland, and North Holland and Zeeland the least affected.
Mortgages greater than houses' worth
Not only are Dutch people losing money if sell their home, now one in three mortgaged homes in the Netherlands has an "underwater mortgage," that is a fiscal mortgage that exceeds the worth of the house (but does not include the amounts households have amassed in savings and investment-based mortgages).
This number amounted to 1,4 million households in 2013, up from 1,1 million in 2012. Since the start of the crisis in late 2008, the share of home owners with underwater mortgages has tripled, from 13 per cent to 34 per cent.
The difference in the amount of debt for each mortgage has also increased in the last year, from 52.000 euros on average in 2012 to 61.000 euros in 2013.
In over two-thirds of homes with an underwater mortgage, the owners are younger than 45, with people under 40 the worst affected. These are the people who bought their home just before the crisis and have not yet redeemed their mortgage. They also run the greatest risk of selling their homes at a loss and being left with residual debt.
By comparison, older home owners do not in general face this problem. In January 2013, nearly 45 per cent of home owners over 65 had no mortgage debt and only three per cent were underwater.