NL home prices up 18%; Biggest increase in 21 years
The overheating in the housing market will not come to an end yet. In August, owner-occupied homes became 17.8 percent more expensive than a year earlier, with which house prices rose even faster than in July. According to Statistics Netherlands (CBS), this is the largest price increase since September 2000.
Over the past six months, house prices increased by double-digit percentages to new record highs. A house is now on average 78 percent more expensive than in 2013, when house prices reached their lowest point.
Fewer homes also changed hands in August. The number of home sales fell by 9 percent to 17,257 transactions, CBS and the Land Registry announced. This concerns existing homes, new construction is not included.
Owning a home is becoming affordable to fewer and fewer people due to the sharp price increases. This makes it one of the biggest political themes for the yet-to-be-formed new cabinet. To solve the housing shortage, the caretaker cabinet is making an additional 1 billion euros available to boost housing construction, was announced on Budget Day. But in his Speech from the Throne, King Willem-Alexander said that the over-strained housing market is a problem that cannot be solved quickly.
Various organizations stated in responses to Budget Day that the extra billion is still far from enough to combat the housing shortage. Real estate association NVM called for hard performance agreements between governments. Director Taco van Hoek of the Economic Institute for the Construction industry warned that only 63,000 houses will be completed this year, while about 100,000 new homes need to be added each year. According to him, there is also a lack of construction sites.
But others pointed out that a lack of housing is not the main cause of the accelerating increase in house prices. Mortgage interest rates are also historically low and home buyers can borrow more from the bank. Low interest rates also make a house more interesting as an investment because bonds yield little. In addition, critics, including President Klaas Knot of De Nederlandsche Bank, argued in favor of phasing out benefits for home buyers, such as mortgage interest deduction, more quickly.
Reporting by ANP.