Netherlands Housing Market Rebounds: Home Prices on the Rise After 2022 Slump.
The trend of decreasing home prices in the Netherlands, which began in August 2022 due to higher mortgage interest rates, has come to an end. In 2023, home prices have seen a slight increase every month, as the high demand and shortage of supply continue to outweigh the impact of the increased interest rate on price development.
According to ING's report, a combination of rising wages, high demand, and low supply is expected to drive up the selling price of homes by 4 per cent in 2024, setting the average sales price at €441,500, based on data from Statistics Netherlands (CBS). The bank attributes this to the ongoing housing shortage and increased wages, which have improved the affordability of homes, making buyers willing to pay more than before. Higher wages also result in larger mortgages.
Despite these factors, ING notes that the market remains tight, with fewer homes put up for sale in recent quarters, and a decrease in the number of newly built homes, keeping the supply relatively low. ING concludes that the housing shortage is only increasing further.
Supply Shortage Continues: Decline in Available Homes Puts Pressure on Buyers
In the past quarter, there has been a decrease of 26% in the number of homes available for sale in comparison to the fourth quarter of 2022. This limited supply of homes puts buyers in a situation where they have fewer options, increasing in the likelihood of homes being sold above their asking price. Furthermore, the scarcity is further amplified due to a strong rise in the number of single-person households.
Although the demand for housing is growing rapidly, the number of transactions is still facing pressure. However, there are indications that the declining trend in transaction numbers has come to a halt. The developments in prices and lower interest rates encourage homeowners who want to move to buy a new home before they have sold the old one. As a result of this, the average selling period has been decreasing over the last three quarters, with houses being sold within an average of 30 days in the last three months of 2023. In line with this, ABN AMRO is also revising its transaction forecasts, increasing them from -2.5% to +0.5% in 2024. Transaction numbers are expected to rise by 3% in 2025. The increase will remain limited this year since there are relatively few new-build properties being completed. However, the new lending standards will allow people to borrow more for houses with good energy labels in 2024, including new-build properties. This might boost the construction and sale of these homes, leading to increased homeowner movement in the market.
Amsterdam's Innovative Approach: Densifying Neighborhoods to Combat Housing Shortage
Amsterdam is modifying its housing construction approach to address the housing shortage. Instead of constructing residences in business areas or building new neighbourhoods, the city will establish 20,000 new homes in existing neighbourhoods that need further investment. The city aims to increase the number of houses and enhance the livability in its neighbourhoods by densifying. Reinier van Dantzig, the housing alderman, made this announcement.
The city will densify the neighbourhoods around Nieuw-West, Noord, and Zuidoost. Buikslotermeerplein, Osdorplein, Arenapoort, and the Zuidas will receive more homes and investments in accessibility, shopping, and cultural facilities. The city stated that these neighbourhoods frequently face social challenges, and maintenance tasks, and have relatively few facilities. These neighbourhoods are being transformed into actual city centres outside the city centre.
As part of the densification, Amsterdam will also invest in more greenery and connections between the city centres. The city intends to link its existing green spaces, allocate more funds to public transportation, and construct new bicycle paths. By 2035, the city hopes to establish 20,000 homes.
Making housing plans by densifying necessitates paying much more attention to the existing facilities and infrastructure than just what needs to be constructed. Residents, entrepreneurs, and inhabitants of Amsterdam have a vital role to play in this. If the city council approves this plan, an intensive participation process will be established. Amsterdammers can submit their ideas about this new strategy starting from 8 February.
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