Cooling of Dutch housing market now also visible in big cities: Land Registry

The sharp increase in home prices seems to be over. The housing market is also cooling down in the large cities, the Land Registry reported based on the housing market figures for the third quarter. How the market will develop in the future in the light of, among other things, the high inflation, the housing shortage, and increased energy prices remains to be seen, the Land Registry said.

The PBK-index, the Land Registry and Statistics Netherlands’ house price index, fell by 1 percent in September compared to August. A month earlier, there was also a decline. The price increases are also less substantial on an annual basis. Existing owner-occupied home prices weres still 9 percent higher in September than the year earlier, but that is much lower than the yearly price increases of 22 percent at the start of this year.

These price decreases can also be seen in the four largest cities. They have seen a “very strong increase” in home prices since 2015. But in the third quarter, Amsterdam showed a slight quarterly decline of just under 1 percent. The Land Registry noted that the capital is often a frontrunner in developments in the owner-occupied housing market. Utrecht showed the strongest decline of the four large cities, with home prices dropping almost 2 percent compared to the second quarter.

According to the Land Registry, the increased mortgage interest rate is one of the main reasons the housing market is cooling down. It means buyers can borrow about 10 percent less than at the beginning of this year. That dampens the price development of owner-occupied homes.

The Land Registry does not yet know how the housing market will develop further. For example, consumers must deal with high inflation and increased energy costs. But on the other hand, wages are rising in many sectors, and the interest rates could fall again in the course of next year if inflation does too. “All in all, it remains to be seen what this will do to the housing market,’ the Land Registry said.