NVM publishes Q2 figures: Dutch housing market craving for new supply
12 juli 2018
Source: NVM, the Netherlands | The trend in the Dutch housing market has been continuing for more than a year now: falling numbers of transactions because supply volume is too low, large price increases and insufficient new-build to meet the growing demand. In many regions the housing market is tight, some regions are balanced and there is only one region (north-east Groningen) which is ample. "The consumer is the victim, with first-time buyers at the forefront", says NVM Chairman Ger Jaarsma. "I'm continuing therefore to argue for an acceleration and increase in new-build production.
For the fourth successive quarter, fewer properties have been sold compared to the same quarter last year. In the 2nd quarter of 2018, almost 11% fewer properties have been sold. In total, NVM real estate agents sold over 38,600 properties (total market approximately 55,000), which is 4,600 less than a year ago. During the last quarter the price increased to a record level of 288,000 euros. Compared to a year ago we have seen an increase of 10.4%.
The time on the market for sold properties currently stands at 45 days, which is 16 days less than a year ago. "The time on the market has not been as short as this since 2000", says Jaarsma. The difference between the original asking price and the transaction price is reduced to 0.1%. A third of properties sold in excess of the asking price. The housing supply has dropped by a third in one year. Midway through the last quarter, NVM real estate agents had 48,300 properties for sale (total existing owner-occupied properties market 69,000).
The asking price for the average home on the market was 375,000 euros in the 2nd quarter. Asking prices are 10.7% higher than a year ago. A potential buyer was able to choose from fewer than 4 properties on average during the last quarter (the NVM shortage indicator currently stands at 3.8). The chance of selling properties that come onto the market has increased further. 72% of new properties on the market are sold within 90 days.
In the 2nd quarter of 2018 more than 7,300 new-build properties were sold by NVM real estate agents, which is approximately the same as a year ago. The price of the average new-build property sold has increased in a year by more than 14% and currently stands at 339,000 euros. "Low supply, high prices and the fact that the majority of new-build properties are being built for those people moving up the property ladder has meant that it is becoming increasingly difficult for first-time buyers to get on the property ladder", says Jaarsma.
Consumers now want to buy first, but in the past they wanted to sell first
A trend in the Dutch housing market is that people are now buying a house first and then selling their own home. "During the crisis it was precisely the other way around", says Jaarsma. "Back then it was mainly a matter of finding a buyer first for the current home, after which it was not difficult to find a new home from the more than adequate supply. In the current tight housing market, a new property is bought first in 70% of cases, before then selling the current home."
According to the NVM Chairman this presents a new challenge for the housing market and for real estate agents in 2018: preventing households who intend to move from sitting on their current property. "If they are unable to find the new home they want then that prevents others from moving up the property ladder and that movement is necessary." Jaarsma is of the opinion that in the current market a buyers' agent has increasing added value. Since 2013, as evidenced by the NVM figures, the share of property sales involving a buyers' agent has increased from 11% to almost 20% by mid-2018. "Having an agile mind in the current tight housing market is a must. A buyers' agent can offer a client speed, expertise and convenience. Properties are being sold very quickly, so as a potential buyer you need to let the buyers' agent analyse your requirements clearly in advance and thus be fully prepared, so that a sensible offer can be made."
The 60+ age group often live in large, poorly maintained and poorly insulated non-urban properties
The NVM has found that the rapidly growing 60+ age group is playing an increasingly significant role in the Dutch housing market. Between now and 2025 there will be an additional 555,000 people in the 65+ age group. "In the future we expect more and more properties owned by the 60+ group to be placed on the market", says Jaarsma. Midway through the 2nd quarter of 2018, 40% of properties on the market belonged to 60+ households. "Outside of the urban areas, properties placed on the market by the 60+ age group are more common than those placed on the market by the non-60+ group", says the NVM Chairman. "In itself that's not of course surprising, because many people in the 60+ age group had moved into a single-family dwelling with their family in the past and those properties are often located in non-urban areas. The supply also reveals that relatively often the property dates from 1971-1980. These are the baby boomers who moved into a new-build property in the 1970s and didn't subsequently move."
The NVM has also noted that the 60+ age group generally places larger properties on the market. Almost 60% of properties placed on the market by the 60+ group have a living area of 130 square metres. Jaarsma: "It can also be seen clearly that the asking prices for these properties deviate from those placed on the market by the non-60+ age group.
More than one third of properties placed on the market by the 60+ group have an asking price of 500,000 euro and more. For the non-60+ group this percentage is not even 20%. This picture fits with the classic property ladder story: Once the children come along, households move out of the city."
The NVM has previously covered the stereotypical image that the next step in the property career of older households is an apartment. "Whether it's because there are no apartments available or because they don't meet the buyer's wishes, the fact is that two-thirds of the 60+group choose to buy a single-family dwelling again. Only one third of the buyers opt for an apartment."
The NVM Chairman says it's notable that a not unsubstantial share of the 60+ group of properties is bought by first-time buyers. More than 20% of properties sold by the 60+ age group are bought by first-time buyers. A survey conducted amongst NVM real estate agents showed that properties placed on the market by the 60+ age group often have to be renovated because they are dated. There are also frequent maintenance problems with properties placed on the market by 'older' people in the 60+ age group. "Because these dated properties have a lower price compared to a well-maintained comparable property, they are of interest to a specific group of households with a lower budget", says Jaarsma. "Investments are therefore required in order to renovate the property and the question is whether the buyer is able to finance that renovation."
NVM expectation: fewer housing transactions and continuing price increases
The NVM adjusted its expectations at the beginning of the 2nd quarter. Jaarsma: "At the moment we are continuing to adhere to these expectations for 2018, in other words a reduction of between 7% and 10% in the number of transactions and a price trend of between plus 8% and plus 10%." The housing market is becoming increasingly more dependent on the new supply placed on the market by households. According to the NVM Chairman, major regional differences in the owner-occupied property market continue to exist.
Note: The latest quarterly figures published by the NVM are provisional figures (see Annex 2 in the 'NVM Housing Figures 2nd quarter 2018' appendix on the NVM website).