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Recovery on the regional housing market - special summary

Economic Comment

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This is a summary of a Dutch special on the recovery on the regional housing market

  • Virtually all the Dutch regions are benefiting from the national recovery in the housing market. The number of transactions rose in every region in 2014, with average sale prices rising in 37 of the 40 regions
  • At a more local municipal level, not everywhere is experiencing a recovery. In virtually every municipality the number of transactions rose in 2014, but average sale prices fell in 128 of the 403 municipalities. Average sale prices are recovering faster in the more urban municipalities
  • We anticipate that thanks to the expected ongoing growth in the Dutch housing market more and more municipalities will benefit from the price recovery during the course of 2015 and 2016

After roughly five years of uninterrupted falls in the number of sales and house prices, the Dutch housing market reached an absolute low in the summer of 2013. The 21% slide in house prices and the sharp fall in mortgage rates did mean, however, a marked rise in the affordability of homes. As a result, the number of transactions rose cautiously during the second half of 2013 and strongly in 2014, leading to reduced availability on the housing market and rises in house prices. As average sale prices of homes had fallen in all regions and virtually all municipalities between 2008 and 2013, combined with uniformly low mortgage rates nationally it is not surprising that the recovery on the housing market took hold virtually across the entire Netherlands. The number of house sales grew just about everywhere in 2014 and average sale prices also rose in most regions and municipalities.

Transactions: growth in all regions and virtually all municipalities

Despite the considerable regional differences in the housing market, all 40 Dutch regions follow the national trend as regards the number of transactions. Between 2008 and 2013 the number of house sales fell in every region, and between 2013 and 2014 the number of transactions rose throughout the country (Figure 1). There are regional differences, of course. Despite the recovery, the number of house sales in 2014 in fourteen regions was still more than 20% lower than in 2008, while in the region ‘Greater Amsterdam’ the number of transactions was already 9% above 2008 levels. The growth in 2014, by more than 50%, was particularly pronounced in the north of the Randstad conurbation (Map 1). Despite its varying pace, the recovery in the number of house sales has now taken hold in every region. Even at a more local municipal level, the recovery is broadly based. With the exception of just five municipalities, the number of house sales grew throughout the Netherlands.

Figure 1: Regions follow national trend, but there are differences
Figure 1: Regions follow national trend, but there are differencesSource: Land Registry, computation Rabobank
Map 1: Growth in number of transactions virtually everywhere between 2013 and 2014
Map 1: Growth in number of transactions virtually everywhere between 2013 and 2014Source: Land Registry, computation Rabobank

Prices: rises in almost all regions and in most municipalities

The rise in the number of transactions led to reduced availability in the market in all regions in 2014 compared to 2013. In some regions the shortages on the housing market were as severe, if not more so, than at the end of 2008 (Figure 2). In 37 of the 40 regions this led to a rise in average sale prices (Map 2). As a result, the price recovery at a national level has been widely felt throughout the housing market. Within the 40 regions, however, there are significant differences. In 128 of the 403 municipalities the average sale price did actually fall in 2014. One possible reason was increased availability with more houses coming on to the market. In general, the towns and cities are leading the recovery in average sale prices, where the very strong urban municipalities are averaging 6% compared to an average of 2% in the most rural municipalities.

Figure 2: Reduced availability on the market in every region, but major differences exist
Figure 2: Reduced availability on the market in every region, but major differences existSource: Land Registry, computation Rabobank
Map 2: Rise in average sale prices in virtually every region
Map 2: Rise in average sale prices in virtually every regionSource: Land Registry, computation Rabobank

Outlook

As described in detail in our Dutch Housing Market Quarterly we anticipate that the Netherlands will experience further growth in the number of house sales and rising house prices during the course of 2015 and 2016. As the main factors affecting this growth differ little, if at all, between the regions, we expect there to be growth in most regions. If the availability on the market declines further as a result, further price rises will be increasingly likely. That is why we expect that more and more municipalities will benefit from the price recovery during the course of 2015 and 2016.

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