Home buyers dug even deeper into their pockets in the past quarter than they already did. With an average sales price of 410,000 euros, the overheated housing market is reaching a boiling point. In a year’s time, the houses sold became on average 20 percent more expensive, a record since 1995, when real estate association NVM started collecting the data in this way.
Realtors don’t know what they’re going through. More than three quarters of the houses are sold above the asking price. That happened to two out of three homes in the previous quarter. ,,I am regularly surprised by increasingly higher yields, while the level of overbidding also increases. The border is being pushed further and the end seems lost,” says Lana Gerssen, NVM chair of the Housing department and a practicing real estate agent, in a press release.
The NVM once again points out that the Netherlands must build new houses faster, but some housing market experts are doubting whether this is the only solution. House prices have risen very rapidly in the past year, while the housing shortage, calculated on the basis of the number of households in relation to the housing stock, has fallen from 331,000 to 279,000, mainly due to the departure of foreign workers. The Netherlands Environmental Assessment Agency nuanced that the 1 million new-build houses up to 2030 that are so often mentioned are probably not necessary at all. Estimates would indicate roughly 500,000 to 750,000 new homes and at the current pace of construction we are already getting there.
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High interest and tax benefits
The biggest driver of the demand for housing and in particular the ammunition with which home seekers enter the market: the low interest rate. The lower the interest rate, the higher the maximum mortgage. The abolition of the transfer tax for buyers under the age of 35 may also have added fuel to the fire, all the more so because young transferees also use it. De Nederlandsche Bank has repeatedly argued for fiscal measures to prevent house prices from spiraling out of control. Examples include further phasing out the mortgage interest deduction or abolishing the jubelton, a tax exemption for gifts of up to 100,000 euros to home buyers.
According to NVM chairman Onno Hoes, there is also a ‘fear of missing out’. Home seekers are afraid to miss the boat and go to the hole. And due to the low supply, homeowners do not yet dare to put their own home for sale, which means that the flow is stalled, he says. The NVM also points out the many losers of the bidding process who ‘are left frustrated’.
More than 34,000 homes were sold in the second quarter of 2021, 12 percent less than in the second quarter of 2020, the quarter of the partial lockdown after the first corona wave. On an annual basis NVM brokers sold more than 149,000 homes, so 34,000 is very low. The selling time of sold homes is now 24 days. 92 percent of the homes are sold within a maximum of 90 days. That’s extremely fast.
New construction and shortage
In the second quarter of 2021, 9,200 new-build homes and building plots were sold, an increase of 24 percent compared to a year earlier. The price of a new-build home sold has risen to an average of 450,000 euros.
The tight indicator is also historically low at 1.4. That means that on average, home seekers can choose from fewer than two homes that fit their budget. There is one nuance that fits with all figures: the average selling price does not directly say anything about the overall increase in value of all homes. It may be that more homes were sold in the more expensive segment in the past quarter, causing the average to rise faster.
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