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Housing market on brink of new slump

The recession is taking its toll on the Dutch housing market. Prices fell in November by 3.3 per cent, the sharpest year-on-year fall in more than 18 months.

Properties across the country are now worth only 2 per cent more than in 2005 and have lost nearly 10 per cent of their value since the peak of early 2009.

The latest figures from Statistics Netherlands (Centraal Bureau voor de Statistiek/CBS) suggest prices are following a similar pattern to the last major slump in the second half of 2009.

In that year a sudden downward shift in June, when the rate of decline accelerated from 2.5 per cent to 3.7 per cent, ushered in a six-month spell during which house prices fell by at least 4.4 per cent every month on the previous year’s figures.

The monthly drop of 0.8 per cent in November was double the figure for October and the worst since June 2009.

Homes lost value in nearly every region of the country in November, with the exception of Zeeland where there was no change. The biggest fall was in Friesland, with an average loss of 7 per cent.

The figures are likely to put pressure on the government to review the system of mortgage interest relief, which has contributed to Dutch households having the largest mortgage debts in the Eurozone.

The government is committed to at least another €5 million of budget cuts next year, with the details due to be released in February. The mortgage discount costs the national economy €12 billion each year.

However, the Freedom Party (PVV), which is propping up the centre-right minority cabinet through the so-called ‘tolerance agreement’ (gedoogakkord), is firmly opposed to any reduction in mortgage interest relief.

Source: NRC: Prijzen koopwoningen dalen met ruim 3 procent

Photo by Xesc Arbona

See also: Statistics Netherlands (in English)

Read previous story: More budget cuts on the way as Netherlands sinks into recession