Home prices slightly higher in January after months of decrease

Existing owner-occupied home prices rose slightly in January after becoming cheaper for several months. According to Statistics Netherlands (CBS) and the Land Registry, prices rose by 1.5 percent compared to December. In the last month of last year, home prices fell over 2 percent compared to November, the most substantial drop in ten years.

Home prices rose sharply until the middle of last year, fueled by the housing shortage and low mortgage interest rates. But in the summer, prices started to decline, measured on a monthly basis, after interest rates began to rise. It is too early to say whether last month’s price increase means a new turnaround.

Measured compared to a year earlier, the picture looks slightly different. According to CBS, exiting owner-occupied homes were 1.1 percent more expensive last month than in January last year. That is the lowest annual increase in almost nine years. Compared to mid-2013, when the market was at a low point, the average price for a house was 93 percent higher last month. The average sales price for an existing home was 424,681 euros.

Economists have been puzzling over the direction of the housing market lately. Experts from ABN Amro recently predicted a “sharp” fall in home prices in the coming years. They thought home prices would fall 10 percent in two years.

The Dutch association of real estate agents NVM noted last month at the presentation of its quarterly figures that the affordability of homes is under pressure due to the rise in mortgage interest. The latter is also why fewer relocations take place. In January, the Land Registry registered 13,126 home sales. That was 6.6 percent less than in January last year.