Dutch home prices up 9% in first quarter; More than half sold above asking price

Owner-occupied home prices in the Netherlands increased by 9.1 percent in the first quarter of this year compared to a year before, the Dutch Association of Realtors (NVM) reported on Thursday. More than half of homes were sold above asking price for the second straight quarter. The housing shortage plays a big role in that, as more buyers bid for fewer homes, the realtors said.

In January, February, and March 2024, homes sold for an average of 432,000 euros, 9.1 percent more than in the first quarter of 2023 and 0.1 percent less than in the previous quarter. Home prices increased for all types of homes, but most for terraced houses (+10.7%) and corner houses (+10.2%).

NVM realtors sold around 29,500 existing homes in the past quarter, 4 percent more than a year earlier but 18 percent less than the previous quarter. A massive 55 percent sold for above the asking price, after the previous quarter saw 53 percent sold at above asking. On average, homes sold for 1.8 percent more than asked in the first quarter. A year ago, the sales price was still 1.2 percent below the asking price.

Nearly 75 percent of homes in Flevoland, especially Almere, were sold above asking price. Roughly two-thirds were sold over asking in the greater Amsterdam regions. Overbidding was nearly as frequent in all of Utrecht, and both the Zaanstreek and eastern region of Zuid-Holland.

Haarlem had the highest average transaction price of 576,000 euros. That was closely followed by the Het Gooi and Vechtstreek, with an average transaction price of 568,000 euros. “Amsterdam (€525,000), Leiden (€512,000) and Utrecht (€510,000) complete the top five,” the NVM stated.

The most extreme price increase was observed in the Delfzijl region, where prices jumped nearly 18 percent to an average closing price of 296,700 euros. Prices in northern Drenthe rose 16.4 percent to 409,600 euros, and 15.3 percent increases were recorded in both IJmond and northern Limburg. The former saw an average transaction price of 459,000 euros, far more than the average of 394,100 in the latter.

Fifteen percent fewer homes were put on the market in the first quarter than a quarter earlier, the NVM said. The supply of existing homes was almost a quarter lower in the first quarter than a year earlier. That further increases the pressure on the already tight housing market, because demand isn’t falling. As a result, more people have to compete for fewer homes.

“Our members notice that more viewers are coming to homes for sale. The number of bids on a home is also increasing,” Lana Gerssen of the NVM said. “Due to the high and increasing demand in the market, the housing supply is drying up.”

Higher wages and a slightly lower interest rate also mean that buyers can borrow more. That, combined with the lower supply, pushes home prices higher and higher. “We now see that buyers are overbidding more often and that prices are, therefore, going to rise,” Gerssen said.

The only solution here is to increase the supply of housing. “We emphasize this again, build and also make smarter use of the existing stock, through transformation or, for example, house division,” Gerssen said.

Aside from the shortage of existing homes on the market, there was also a serious lack of supply of newly-built homes and units in projects that have not yet been completed. “The supply of new-build homes this quarter is approximately 13,900 homes, 15% less than last quarter. The housing supply is therefore drying up, both in the existing market and in the new construction market,” the NVM said.

The shortage of available homes unsurprisingly led to a surge in sales of newly built homes. Realtors sold twice as many of these homes compared to a year earlier, with nearly 7,000 purchased last quarter. That was up 16 percent compared to the previous quarter and up 104 percent versus the first quarter of 2023.

New construction homes sold for a median price of 479,000 euros, up 1.4 percent compared to the fourth quarter of 2023. The price was 2.3 percent higher than the average reported by NVM a year ago, 468,000 euros.

In the fourth quarter of 2023, an average existing home sold for 434,000 euros, 5.3 percent more than in the final quarter of 2022. It was the first annual increase since the third quarter of 2022. After that, there were four quarters of slightly lower home prices as higher interest rates put pressure on how much Netherlands residents could lend for their mortgage. But that effect was quickly canceled out by the tightness in the Dutch housing market.