Another slight increase in home prices month-on-month; Declining trend over
Home prices in the Netherlands rose slightly in August for the third month in a row, Statistics Netherlands (CBS) reported. According to CBS chief economist Peter Hein van Mulligen, home prices are “stabilizing” after months of price declines.
The average price of an existing owner-occupied home was 0.6 percent higher in August than in July. In the previous month and in June, prices also rose by less than one percent. “With one month, you can still say there is a short interruption, but with three, it seems that the price drop is behind us,” said Van Mulligen.
The expert pointed out that the effect of the increased interest rates seems “more or less over now.” The fact that home prices fell for months was mainly due to the rapidly rising mortgage interest rates. That meant home buyers could borrow less, pushing down prices.
With a ten-year fixed mortgage, the interest rate used to be just over 1 percent. Now, you quickly pay 4.5 percent interest. That is a big difference,” Van Mulligen explained. Although interest rates could still rise further, he thinks home buyers are now less shaken by it. “The difference between 4 and 5 percent is very different from the difference between, for example, 1 and 2 percent interest.”
Compared to August last year, home prices were still 4.8 percent lower last month. Another factor is that prices peaked last year. The year-on-year decline is now smaller than in the three previous months.
The figures also show that 15,934 homes changed hands last month. That is almost 3 percent less than a year earlier. Viewed over the first eight months of the year, home sales were almost 7 percent behind the same period a year ago.
Van Mulligen would not venture into predictions for the housing market. CBS does know from research that the demand to move is still there. According to Van Mulligen, that has an upward effect on home prices. The Netherlands is struggling with a major housing shortage. Experts and industry organizations have insisted for some time that many more houses must be built.
Reporting by ANP