The temperature in the overheated housing market does not seem to decrease just yet. In fact, the most recently recorded house prices for July 2021 again show new record highs. The value of existing owner-occupied homes rose further in this month by an average of 1.5%. Compared to a year earlier, Dutch homes became 16.3% more expensive, which is the largest price increase since the year 2000. And the end does not seem to be in sight by a long shot.
Detached houses are sold above the asking price
Detached houses have been able to withstand the trend the longest, but it became clear last July that houses in this category were being sold above the asking price on average. The reason this is happening so late is probably because vendors of detached houses often offer more room to negotiate, increasing the likelihood that the final selling price will be somewhat lower. Discounts were already hardly given, but since July there has been a structural overbidding in every house category. Especially in big cities like Amsterdam, significant outbidding has become the norm. It is therefore highly advisable to use a professional purchase broker with a thorough knowledge of the local market and a transparent working method.
Determinants of high house prices
Against all expectations, prices continued to rise during the corona crisis. So what factors are responsible for the fact that even housing market experts from the Nederlandsche Bank have now had to significantly revise their predictions for the coming years? The main reason for the current upward price spiral is that there is simply a scarcity of affordable (rental) housing. And the homes that are still for sale at a somewhat acceptable asking price are often bought by investors who then rent them out at high rates. This development is making it increasingly difficult to find affordable housing and is stagnating the dynamics of the housing market. The continuing low mortgage interest rates, low unemployment and high spending power of home buyers are further determining factors that are having a price-enhancing effect on house prices.
What is striking is that the Funda Index recently showed a slight decrease in buying intention among home seekers, but the search for a new home continues relentlessly. The structurally high demand for houses is not only visible in the Randstad area, but throughout the country the asking price is driven up because the supply of houses is limited everywhere. It sometimes seems as if exorbitant asking prices and scarcity on the housing market are only reserved for homebuyers in Amsterdam and other large cities, as this is regularly reported in the media, but nothing could be further from the truth. In Drenthe and Groningen, too, overbidding on the asking price by more than 10% has become the norm and the rise in house prices there is even faster in percentage terms than in cities like Amsterdam.
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