Housing prices in major cities falling as more first-time buyers make purchases
The average price for a home on the market fell sharply last quarter in the four largest cities in the Netherlands. First-time buyers, who often buy less expensive homes, have especially been on the rise in the cities, land registry Kadaster said on Wednesday based on housing market figures.
In the four largest cities of Amsterdam, Rotterdam, The Hague and Utrecht, a home cost an average of 480,000 euros in the first three months of 2023. That's 8.2 percent less than a year earlier. In addition, the share of homes sold to first-time buyers in major cities grew from 50 percent last year to 58 percent this year.
In the rest of the country, the average price fell 0.8 percent, at 408,000 euros. But, the price there has mainly been pulled down due to the price drop in the big cities, Kadaster said.
The land registry said the reason that homes in the city are becoming cheaper is related to a number of factors, especially the advance of people buying their first home. Their likelihood of buying a cheaper home from the real estate inventory led to a reduction of the average sale price.
The housing inventory on offer has also become more extensive. Kadaster said that small private investors are now selling more homes than they are buying. This concerns homes in cheaper price ranges, often in the big cities. More than 60 percent of these homes in Utrecht, The Hague, Rotterdam and Amsterdam were sold to a first-time buyer.
Kadaster further noted that the budget that first-time buyers have available has “solidly” decreased. They often have little available capital and therefore have to finance a large part of the housing value. At the same time, NHG national mortgage guarantee program said that the increased mortgage rates have reduced the financing options available to homebuyers. This will result in the Dutch housing market becoming increasingly stalled, NHG said.
As an example, NHG cited a mortgage of 405,000 euros. To be able to borrow that amount, an income of 81,500 euros is currently needed. However, in August 2021 that total was still 71,000 euros.
Reporting by ANP