Newly built homes increasingly more expensive than existing ones

New construction homes are becoming more and more expensive compared to pre-existing homes, and the newly-built homes are continuing to remain on the market for much longer periods of time. This lopsided growth presents a worrying development, said WoningBouwersNL, a trade association for real estate developers and construction entrepreneurs.

Nationally, the price difference between a new-build and existing owner-occupied home has risen to an average of 86,000 euros. This is partly due to the sharp increase in construction costs. It now takes an average of 58 days longer to sell a new construction home compared to an existing home. There has been a substantial fall in demand for new, expensive apartments in particular. This decrease was sharp just in the past six months, according to a report published on Wednesday.

“What is of the greatest concern is that, in some regions, new construction seems to be priced out of the market. For example, the difference in sales price of an average new-build home in Zuid-Holland has risen to no less than 228,000 euros more than an existing home,” the researchers wrote.

In almost all provinces, new-construction sales took a heavy hit in the past half-year, with the worst outliers being in Friesland (minus 66 percent), Zeeland (minus 64 percent) and Drenthe (minus 56 percent).

Due to poor sales of newly-built homes, many construction projects are also being cancelled. “Fewer building plans are also being made. In light of the enormous housing shortage, this is highly undesirable from a social point of view,” the trade association concluded.

From a practical standpoint, the association said there should be more small, cheap apartments and fewer spacious, more expensive units. There should also be much more space for the construction of ordinary houses. “Especially on the edges of villages and towns there are many opportunities to increase housing construction considerably through small-scale expansions,” where effectively an entire street is added.

It was previously announced that sales of newly-built homes had collapsed to just over 9,000 in the first half of this year. That is the lowest number since the crisis year 2013. It is partly because many residential investors have withdrawn as a result of government regulatory measures.

WoningBouwersNL expects that market conditions will improve somewhat in the coming year. But: “The new construction market is still in dire straits as long as those who move on are left to fend for themselves. Investors have moved away, and corporations are only partially filling the gap they leave behind.”