RaboResearch - Economic Research

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End-of-year rally on the Dutch housing market stronger than expected

Economic Comment


• NVM figures for 2014Q4 stronger than expected
• Median house prices 3.5% higher compared to 2013Q4
• Number of sales rose strongly: more than 30% y-o-y
• Regional differences remain considerable
• Further growth in house sales and prices expected in 2015

An accelerating rise in sale contracts …

The last quarter of 2014 was the best fourth quarter for NVM estate agents since 2007, with 34,622 sales (figure 1). With a seasonally adjusted increase of 13.7% compared to the third quarter of 2014 there was an acceleration in the rise in the number of sale contracts. During the first three quarters of 2014 sale numbers rose by an average of 5.2% per quarter, adjusted for seasonal effects. The recovery on the housing market that has been underway since mid-2013 clearly rallied sharply towards the end of last year. 

Figure 1: Best fourth quarter since 2007
Figure 1: Best fourth quarter since 2007Source: NVM, Rabobank

… is contributing to a rise in house prices

The increase in the number of sales is now giving vendors a better negotiating position; a factor that is contributing to the price rises. Median house prices continued to rise during the last quarter, both on a quarterly basis (+0.4%, seasonally adjusted) and an annual basis (+3.5%). The median house price as recorded by the Dutch Association of Real Estate Brokers (NVM) is not adjusted for quality features and the composition of house sales by house type such as the Existing Homes Price Index (Prijsindex Bestaande Koopwoningen - PBK) of the Land Registry /CBS, but viewed as a whole there is a close correlation between movements in both of these yardsticks (figure 2). Similarly, the PBK has also risen, but at an estimated 1% this growth has been more modest than that shown by the NVM's measurement criterion.

Figure 2: Further price rises
Figure 2: Further price risesSource: CBS, NVM, Rabobank

Regional differences remain considerable

The rise in the number of sales and house prices is clearly evident in most regions and is reducing the choice of properties available to buyers (figure 3). At the same time, in many parts of the country there is still ample supply on the housing market. Shortages are mainly to be found in the metropolitan areas. The NVM (2014) noted that in a number of cities such as Amsterdam, Utrecht and Breda the market is particularly favourable for vendors. On the other hand, the more peripheral areas such as the Achterhoek in the east of the country, the northernmost tip of the province of Noord-Holland (De Kop van Noord-Holland) and Northeast Groningen are benefiting much less from the recovery. This is entirely in line with our view that in times of recovery the urban areas are the first to recover, followed by the rural areas (Oevering, 2014).

Figure 3: Less choice for buyers
Figure 3: Less choice for buyersSource: NVM

Outlook positive for this year

In our recent comment on the housing market, we had already indicated that we expected a strong month of December in the number of existing owner-occupied homes changing hands as registered with the Land Registry. During the last quarter of 2014, buyers were still able to benefit from the relaxation of the gift tax exemption and less stringent Nibud standards, which have become stricter since 1 January this year. The rising number of sales contracts reported by the NVM for the fourth quarter does however suggest that the rise in the number of transactions in December was even higher than we had expected.

Some of the transactions towards the end of 2014 had been made possible with gifts under these relaxed gift tax exemption rules, and therefore had to be finalized by the end of that year. This may mean that sales during the first few months of 2015 will be more sluggish than we generally see at this time of the year. However, in our Dutch Housing Market Quarterly we explain why we expect to see house sales and prices rise further in 2015. Major factors supporting our predictions are the recent economic recovery, rising levels of confidence and historically low mortgage rates. 


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