House prices have dropped 8.2% year on year, an increase in the rate of slowdown, according to the NVM estate agent association.
Although figures for the first quarter of 2023 represent only a proportion of sales contracts, they are seen as a bellwether for overall market trends at the point of exchange several months later.
The organisation, which released its quarterly figures on Thursday, described the situation as a ‘new balance’ with ‘more friendly’ sales prices but higher mortgage costs than in recent years.
Although the unprecedented 20% annual increase in prices during corona has not been corrected, the rate of slump has increased and sales dropped to a five year low. The first major sign of change came in the final three months of 2022, when year-on-year median house prices fell by 6.4%, according to the NVM.
This year, almost twice as many houses were for sale between January and March than in 2022, with a total of 31,000 for sale boards with NVM estate agents. The median sale price dropped by 3.6% compared with the last quarter of last year, with a marked collapse in pricier new build houses and properties of over €1 million.
‘Everyone thought that price increases of 20% a year would not be sustainable,’ said head of the NVM housing group Lana Gerssen, in a statement. ‘This is a normal correction on the enormous price rises of the past years… Buyers have more choice from a more affordable offering. But this is offset by increased mortgage rates, which result in slightly higher monthly costs.’
Fewer houses came onto the market than at the end of last year, however research from NVM’s statistical arm brainbay found that new sellers were listing properties for more realistic prices. Overbidding has ended, said the NVM, and for the first time in four years, buyers were paying a little less than the asking price, especially for detached houses.
New build in trouble
Although the average house has an asking price of €506,000, houses going on the market are typically asking €419,000. ‘House sellers who have had their house for sale for a longer time, cannot or will not lower the asking price yet, while sellers who recently put their house on the market are already anticipating the latest market developments better and putting their house on at a realistic asking price,’ said the NVM in a market analysis.
Although there is still a shortage of homes and 3.3 places for sale per buyer – relatively low – since May 2022 the market has turned. Recent new build transactions dropped to a five year low, with fewer sign-ups for new plans too.
In the first three months of 2023, NVM agents sold 4,200 new builds, a drop of 37% on a year before. The median new build price dropped 2.9% to €468,000, and sales particularly fell off for homes costing over half a million euros. Around a tenth fewer new builds than a year before came on the market at the start of this year, almost half of them apartments.
Chris van Zantwijk, deputy head of the NVM housing group, said that this was a worrying development. ‘Plans regularly fail to sell or are cancelled due to lagging sales,’ he said in a statement. ‘If new build comes to a halt, we are creating a housing shortage for the future.’
The land registry showed the first annual drop in house prices since 2014 last month, of 0.8%, and analysts suggest there will be a 6% drop this year. The cause is the higher cost of borrowing, as central banks raise their rates and mortgages return to a typical level around 4%.
The NVM has around 4,400 estate agent and valuation expert members and owns 70% of the Funda property sale website.
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