House prices will continue to rise to "historical" levels next year: Dutch Central Bank

House prices in the Netherlands will further increase next year, the Dutch Central Bank (DNB) stated. The annual increase will be smaller compared to recent years, but will still remain "high from a historical perspective".

DNB stated that homes will become on average 10 percent more expensive this year. In line with the slightly rising interest rates on the capital market, mortgage interest rates will also rise next year. As a result, the expected price increase in 2022 will be 5.5%.

The new estimates are considerably higher than what DNB had foreseen in their December projections. In April, for example, owner-occupied homes were sold at an average price of 11.5% higher than a year ago, marking the largest price increase in twenty years.

The situation was largely caused by the enormous shortage in the housing market. The supply of houses for sale has shrunk considerably, meaning that people have to compete against each other to get hold of a new home. The low mortgage interest rate also plays a role, as did the abolition of the transfer tax for first-time buyers under 35.

In the same report, DNB also stated the Dutch economy has been showing signs of recovery starting from the second quarter of this year after the historic hit to the GDP last year. According to the bank, recovery was happening so quickly that GDP could eclipse pre-pandemic levels by the end of the year.

DNB also argues for more homes to be built. The experts stated that the government's target to build an average of 90,000 homes per year until 2030 would likely be missed again in 2021.