House prices rising in the Netherlands
Much like almost everywhere else in the world, the Netherlands had its fair share of economic problems following the 2008 financial crisis. House prices fell by more than 7.5% over the year in real terms and it took until 2014 for them to recover, according to data from Nederlandse Vereniging van Makelaars (the Dutch Association of Real Estate Agents).
Unsurprisingly, the same data confirms that the continuous fall in property values between 2008 and 2014 went hand in hand with a fall in property transactions over the same period. The fall in prices led to fewer people wanting to move, which led to a fall in demand, which led to prices falling further, and so on.
However, in recent years the market has been recovering and is now looking very strong again. The 2.7% real terms growth of the market in 2014 has approximately doubled in each year since, returning the market to its previous good position.
The overall number of property transactions in the first quarter of 2017 confirms this upward trend – a total of 92,595 units were sold over those three months, marking a rise of 25% over the same period in 2016.
Given that the total of 214,793 units sold over 2016 was the highest since 2008, this looks set to be another bumper year for the Netherlands, with Rabobank predicting that house prices will increase by an average of 5% this year across the country compared to 2016. Indeed, DutchNews.nl reported in May that house price rises are currently at their strongest rate for 15 years.
It is perhaps not surprising that this rapidly growing demand has led to a shortage of supply – and this is an issue which will perhaps not be fixed very soon. Global Property Guide reports that only 51,000 units received planning permission in the Netherlands in 2016, representing a drop of 4.7% compared to 2015. In addition to this, there were approximately 150,000 units available for sale in the first quarter of 2017 – 90,000 fewer than the same period in 2013.
What does this mean for the future of the market? Unless planning permissions and construction can be greatly accelerated over the next few years it is likely that prices will continue to rise and that the pace of growth in this area will accelerate quite quickly. Popular cities such as Amsterdam and Utrecht are likely to experience this to a greater degree than the rest of the country.
The Dutch economy has followed a similar trajectory to the housing market and recorded strong growth in the first quarter of 2017 when compared to previous years. This economic growth is projected to continue over the next year, and that will naturally lead to more people wanting to move house. I G & H, a Dutch mortgage advisory firm, report that 83,000 mortgages were agreed in the first quarter of 2017, of which the vast majority went to current homeowners looking to move.
Now might be an interesting time to invest in the Netherlands...