The heat on the overheated housing market doesn’t seem to be cooling down anytime soon. On the contrary, the most recent figures from July 2021 once again show new record highs. The value of existing homes rose by another 1.5% that month. Compared to a year earlier, Dutch homes have become 16.3% more expensive, the largest price increase since the year 2000. And there’s no end in sight.
Detached homes now also selling above asking price
Detached homes resisted the trend the longest, but in Q2 of 2021, it became clear that homes in this category were also, on average, selling above asking price. The reason this is only happening now is likely because sellers of detached homes often offer more room for negotiation, making it more likely that the final sale price ends up lower. Discounts were already rare, and since July, nearly every home category sees consistent overbidding. Especially in major cities like Amsterdam, significant overbidding has become the norm. Hiring a professional buying agent with in-depth local knowledge and a transparent approach is definitely recommended.
Key factors driving high home prices
Against all expectations, prices continued to rise even during the COVID crisis. So what factors are causing even housing market experts at the Dutch Central Bank to revise their forecasts? The main reason is the ongoing shortage of affordable (rental) housing. Homes that are still listed at relatively acceptable prices are often bought up by investors. This trend makes it increasingly difficult to find affordable housing, stagnating the dynamics of the market.
Other price-driving factors include persistently low mortgage interest rates, low unemployment, and the high spending capacity of buyers.
Interestingly, while the Funda Index recently showed a slight dip in purchase intention among home seekers, the search for a new home continues steadily. The persistently high demand for housing is not limited to the Randstad. Across the country, asking prices are being pushed up due to a shortage of supply.
It might seem like extreme asking prices and housing shortages only affect buyers in cities like Amsterdam because that’s where the media often focuses, but nothing could be further from the truth. Even in places like Drenthe and Groningen, overbidding by more than 10% has become standard. In fact, prices there are rising even faster (percentage-wise) than in cities like Amsterdam.
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