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Ongoing positive momentum of Dutch housing market

Economic Comment

  • NVM figures for the second quarter of 2015 show strong growth
  • Home sales are up by more than 28% compared to previous year
  • With an increase of 2.6% on a quarterly basis and 3.9% on an annual basis, house prices increased relatively strongly as well
  • The outlook for this year is positive

NVM figures show strong growth

The latest figures from the Dutch Association of Real Estate Brokers (the NVM) are positive. Both the number of purchase contracts and the median house price rose relatively strongly in the second quarter of this year. In our Dutch Housing Market Quarterly we describe why we expect to see a further increase in sales and house prices this year and next. Important drivers include low interest rates, high confidence and the economic recovery. The figures from the NVM confirm this development.

Strong increase in purchase agreements in the second quarter …

The number of purchase contracts through NVM brokers is registered on average two months before the actual transfer at the Land Registry, and therefore gives the most current picture of the market for existing owner-occupied homes. With 37,145 sales in the second quarter of this year, it was the best quarterly figure since 2007. It is even higher than the strong fourth quarter of last year, which was affected to some extent by the temporary gift tax exemption end-of-year rally. On an annual basis, the increase was 27.6%. The total over four quarters has been rising continually since mid-2013 and with this figure has reached over 130,000 (figure 1).

It could be that the strong increase in purchase agreements is due partly to anticipation of changes to policy measures as of 1 July this year. These concern a tightening of the National Institute for Family Finance Information (Nibud) norms, meaning that households can borrow less. The VAT rate applying to the construction industry will also return to 21% from 6% and the limit for eligibility for the National Mortgage Guarantee Scheme will be reduced by € 20,000 to € 245,000. This could mean that the third quarter is slightly weaker. 

Figure 1: Best second quarter since 2007
Figure 1: Best second quarter since 2007Source: NVM, processed by Rabobank

… means a tighter market …

As a result of the increase in sales, the choice available to consumers is slowly but surely becoming less. This figure declined on a quarterly basis (seasonally adjusted) further from 12.8 in the first quarter to 11.9 in the second quarter. The decline in choice was visible in every segment (figure 2). Although tightness is mainly restricted to the inner-city areas, the regions outside the Randstad are also showing a gradual contraction of supply. The NVM says that ‘the recovery that started in Amsterdam is beginning to spread across the rest of the Netherlands.’ This fits our view that more or less all the studies point to a national recovery (Aalders en Van Dalen, 2015). 

Figure 2: Number of choices declines
Figure 2: Number of choices declinesSource: NVM, processed by Rabobank

… which will push house prices higher

Lower supply in the market will strengthen the negotiating position of sellers. The median house price has risen strongly, by 6.2% from € 211,000 in the first quarter of 2015 to € 224,000 in the second quarter. The NVM series has not registered a quarterly increase of more than € 10,000 since the year 2000. The NVM’s median house price however does not adjust for quality features and the composition of home sales by type of dwelling, as does the Existing Homes Price Index (the PBK) published by the Land Registry and Statistics Netherlands. Despite their relatively high correlation over the long term, the two measures have diverged from time to time during the past year (figure 3). In its own adjusted series, the NVM reports a more modest rise in house prices of 2.6% on a quarterly basis and 3.9% on an annual basis. This suggests that the strong rise in the median house price is partly due to increased sales of relatively expensive homes. Nevertheless, the price development reported by the NVM supports our expectation of further house price increases as reported by Statistics Netherlands (figure 3).

Figure 3: Price index of Statistics Netherlands and median house price according to the NVM
Figure 3: Price index of Statistics Netherlands and median house price according to the NVMSource: NVM, processed by Rabobank
Pieter van Dalen
Rabobank KEO
+31 30 21 2666
Paul de Vries
RaboResearch Netherlands Rabobank KEO
+31 88 726 7864

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