Holland: Homes in the Netherlands keep getting more expensive; in other countries prices are declining.
The number of homes sold in the Netherlands further declined in the third quarter, but prices rose faster: by an average of 9.2 percent
This surprisingly high pace of price rises forces us to increase our already high expectation of 8.7 percent for 2018 to 9.0 percent this year
Prices are increasing rapidly in several developed countries, but in Australia, Sweden and the United Kingdom they are declining again
This seems to be largely due to specific policies in those countries, such as a higher stamp duty in the United Kingdom for buyers of second homes
Nevertheless, these price drops can be a precursor for the Dutch housing market
Partly because of that, we are lowering our price forecast for 2019 from 7.0 to 6.0 percent
That is still a very hefty price increase though, as it means that the average home in the Netherlands will cost more than 300,000 euros next year
The number of sales is likely to decline further to around 225,000 homes in 2018 and to about 210,000 homes in 2019
In the third quarter of 2017 more than 61,000 homes in the Netherlands switched owners, but between July and September of this year that number dropped to less than 57,000. Proportionally the decline was strongest in the province of Flevoland: the number of sales fell by more than 12 percent according to figures of the Dutch Land Registry (see figure 1). In absolute terms it was South-Holland that saw sales slide quickest: 1,143 fewer homes were sold there y-o-y. Groningen, on the other hand, saw sales remain relatively steady while in Zeeland the number of transactions actually went up y-o-y. In the Netherlands as a whole a total of 162,000 owner-occupied homes were sold in the first nine months of 2018, which is about 7.8 percent less than a year earlier. Unsurprisingly the three Randstad provinces and their largest cities (Noord-Holland [Amsterdam], Zuid-Holland [Rotterdam and The Hague] and Utrecht [Utrecht]) saw the largest decline in transactions. At the current rate the number of sales in 2018 is likely to end up below 225,000 homes.
While sales in Flevoland fell hard in the past quarter, the province is at the top of the list of largest regional price hikes (see figure 2). In the third quarter, home buyers in Flevoland paid an average of 11.5 percent more than those who bought a house there a year earlier. Zeeland is at the bottom of the list: in that province buyers had to pay ‘just’ 6.0 percent more for a owner-occupied home - roughly 12,500 euros more than a year earlier. In the Netherlands as a whole prices rose 9.2 percent between July and September, compared to the same period in 2017. That is the biggest increase in seventeen years of time. The quarter-on-quarter increase was remarkably strong as well at 2.7 percent (see figure 3). That means the average owner-occupied home in the Netherlands saw its price increase by roughly 7,000 euros in just three months.