Home prices down 0.8% in Feb.; First year-on-year decrease in nearly a decade

In February, owner-occupied homes were cheaper than a year earlier for the first time in almost ten years. Prices fell by 0.8 percent on an annual basis, Statistics Netherlands (CBS) and the Land Registry reported.

Compared to January 2023, prices fell by 1.5 percent. In the first month of this year, home prices rose unexpectedly compared to December.

The month-on-month price decline resumes the trend of the months leading up to January. Home prices rose sharply until the middle of last year, aided by the housing shortage and low mortgage rates. But a change came in the summer when interest rates started to rise.

Compared to a year earlier, however, there were still price increases. A decrease has now also been measured there, the first since April 2014. However, house prices were still 90 percent higher than at the low point in the market in June 2013. The average sales price of an existing home was 410,189 euros in February.

Economists at ABN Amro expect home prices to fall “sharply” in the coming years. They predicted owner-occupied homes in the Netherlands would be about 10 percent less in two years.

The number of relocations is under further pressure due to the higher mortgage interest rates in combination with the still high house prices. As a result, the affordability of homes is under pressure, which was also noticeable in the number of homes sold last month. The Land Registry registered 11,858 homes changing ownership, 15.5 percent less than a year earlier. In the first two months of 2023, the number of home sales is 11 percent behind a year earlier.

The price decrease measured by CBS is not yet as extreme as the decrease previously calculated by the Dutch Association of Real Estate Agents (NVM). According to the realtors, house prices already fell 6.4 percent on an annual basis in the last quarter of last year. CBS only processes house sales when civil-law notaries register them with the Land Registry. The NVM figures are more incomplete but are based on the moment the purchase contract is signed. That is a while before the sale is registered, which means that the realtors often identify trends earlier.