Increase in Dutch house prices among the highest in the EU
Not only are Dutch home prices among the highest in Europe, they are also increasing at one of the fastest rates in the EU. Housing prices in the Netherlands saw the largest increase in July since 2000, Statistic Netherlands (CBS) reported.
An increase in home prices is noticeable in many OECD countries, particularly in many EU member states. The Netherlands is near the top of the list of EU countries with the largest increase in housing prices in the first quarter of this year. Only in Luxembourg, Slovakia, Sweden and Austria did house prices see a heavier increase during the first quarter.
Due to the coronavirus crisis, people have been able to save more money which some chose to invest in a house. The increased demand was one factor in prices shooting up. A house in the Netherlands cost on average 400 thousand euros in 2021.
Additionally, the housing shortage in the Netherlands has already been apparent for many years. “In the Netherlands, houses are rarely ever built before they are sold on paper, so there is hardly any vacancy and prices never have the chance to decrease”, Paul de Vries from the land recording service Kadaster said to NU.nl.
Financing a home was facilitated through low-interest rates and the exemption of people under the age of 35 from the transfer tax earlier this year. Since the beginning of this year, 90 percent of a household’s second income can be included in the calculation of the maximum mortgage.
Yet, these developments push housing prices even further up, according to ING economist Mirjam Bani. “If the exemption from the transfer tax and the mortgage interest deduction are abolished, the rise in housing prices will be slowed down”, she said to Nu.nl.
De Vries disagreed that mortgage rates are to blame for the increase. The mortgage interest deduction could even lower house prices, according to him. Instead, he advocated for stricter lending standards that would prevent people from borrowing the full value of their house.
