High city house prices hit labour market

Rising house prices are making it increasingly difficult for first-time buyers, especially in the major cities, and this is starting to have a negative effect on the labour market in these areas, warns estate agents association (NVM).

The warning came from the new NVM chairman Ger Hukker on Wednesday during the presentation of the latest housing market figures.
House prices have gone up by 2.2% in the Netherlands as a whole in the second quarter, but the rise in the Randstad region (Amsterdam. Rotterdam, The Hague and Utrecht) is 3.3%, said Hukker.
The average price for a house is now €248,000.
Because they cannot afford a house in the region, first-time buyers are looking for jobs outside the Randstad, Hukker told today’s Financieele Dagblad. ‘Buying a house is already almost impossible and this will only get worse,’ Hukker said.
The NVM points out too that the situation is made worse by the fact that mortgage rates are rising and mortgage lenders introduced stricter regulations at the beginning of 2007. According to the AD, this has reduced the borrowing power of house-buyers by around €25,000.
Although the cabinet wants between 80,000 and 100,000 new houses to be built every year, production fell 16% in the first quarter of this year.
Hukker accuses the cabinet of creating a taboo around any discussion of housing market problems because this might impact on mortgage tax relief. The Netherlands has the most generous tax break on mortgages in Europe.
The government’s social and economic policy advisory unit SER is carrying out research into the housing market. A spokesman told the FD that this will be completed at the end of 2008.

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