Home prices fell 2.3% in December; Strongest decline in a decade

Prices of existing owner-occupied homes fell again in December compared to the previous month. Home prices dropped 2.3 percent compared to November - the strongest decrease in ten years, Statistics Netherlands (CBS) and the Land Registry reported. Prices have been weakening for five consecutive months. Over the whole of 2022, home prices were still 13.6 percent higher on average than a year earlier.

Compared to December 2021, existing owner-occupied homes became 2.7 percent more expensive in December 2022. That is the smallest annual price increase in over seven years. The average transaction price for an owner-occupied home was 401,436 euros last month.

Prices of existing owner-occupied homes reached an all-time low in June 2013. After that, they climbed until August 2022. From that month onwards, a decline has been visible. Compared to the low point in June 2013, home prices in December were over 90 percent higher.

House prices are mainly under pressure from rising mortgage interest rates. As a result, people can borrow less for their mortgages. In addition, people’s purchasing power has declined due to high inflation. The supply of houses for sale is also still limited. All this also led to fewer relocations last year. According to the Land Registry, a total of 193,103 homes were sold. That is almost 15 percent less than in 2021. In December, slightly more homes changed hands than a year earlier.

The price decrease measured by CBS is not yet as extreme as the decrease recently reported by the Dutch association of realtors NVM. According to the real estate agents, house prices fell by 6.4 percent annually in the past quarter. CBS only processes house sales when civil-law notaries register them with the Land Registry. The NVM figures are incomplete but are based on the moment the purchase contract is signed. That is sooner, meaning the NVM can often identify trends earlier.

Economists recently pointed out that most homeowners need not worry about the price falls for now. However, people who bought a house last year at the peak of the housing market will feel the fall in house prices if they want to sell their home now, ABN Amro economist Philip Bokeloh said. “That be a reason not to divorce or to keep a house.” The situation is also still very difficult for first-time buyers.