Netherlands home prices drop 0.7%; Biggest month-on-month decrease since May 2013

The fall in Netherlands home prices kicked up a notch in September. According to Statistics Netherlands (CBS), home prices were, on average, 0.7 percent lower in September than a month earlier - the most significant month-on-month decrease since May 2013. A total of 17,631 homes changed hands last month.

In August, home prices dropped 0.1 percent. CBS economist Frank Notten noted that the time for price increases is now “really a thing of the past.”

Compared to a year ago, owner-occupied homes were still almost 10 percent more expensive, but the difference on an annual basis is getting smaller by the month. At the start of this year, the stats office reported the strongest annual price increase in decades, with a plus of about 21 percent.

The price decrease measured by CBS is not yet as extreme as the decrease recently calculated by the Dutch Association of Real Estate Agents (NVM). According to realtors, home prices fell almost 6 percent in the third quarter compared to the previous three months.

CBS only processes house sales when notaries register them with the Land Registry. The NVM’s figures are more incomplete but are based on the moment the purchase contract is signed. That is sooner than the sale goes through, so the realtors can identify trends earlier.

The fall in house prices should not deter people thinking of buying a home in the near future, President Klaas Knot of De Nederlandsche Bank (DNB) said a week ago. He regarded the developments in the housing market as a “welcome relief.”

According to Knot, the falling house prices mainly result from rising mortgage rates. They mean that people can borrow less. Ultimately, however, the market should reach a new equilibrium.

Knot also pointed out that many homes are still being sold above the asking price and that there is still a significant shortage of homes in the Netherlands. According to Knot, you should not see a house as an investment but buy a home to live in.