According to ABN AMRO, the number of homes sold surged by 42 per cent in February 2014 compared to the previous year, indicating growing buyer confidence. This uptick in activity comes after years of stagnation following the 2008 housing crisis.
Several factors are driving this recovery, including historically low interest rates and house prices that have dropped approximately 20 per cent from their 2008 peak.
The reduction in property transfer tax from 6 per cent to 2 per cent has also made purchasing more attractive for potential buyers.
Johan Conijn, Housing Market professor at the University of Amsterdam, points to pent-up demand as a key factor.
“In the past few years a reservoir of potential buyers has formed. That group has been waiting for a long time, but at a certain moment there will be a turning point and they will make their move,” he said.
The construction of new houses remains at low levels while household numbers continue to grow, creating additional pressure on the existing housing stock. This supply-demand imbalance is contributing to the gradual price increases observed in some regions.
Rising rental costs are also pushing more people toward homeownership. Social housing and market rents have seen steep increases of up to 6.5 per cent this year, making buying a home a more financially secure option for many households.
Despite these positive indicators, the recovery faces significant headwinds.
The Dutch Central Bank projects that two-thirds of mortgages that were underwater in 2012, where the mortgage amount exceeds the home’s market value, will remain in that state even ten years later.
The Netherlands Association of Real Estate Brokers (NVM) cautions that it will likely take considerable time before house prices return to pre-crisis levels.
This creates a dilemma for current homeowners who must decide whether to remain in their homes hoping for appreciation or sell at a loss to take advantage of lower prices elsewhere in the market.
The current market presents distinct opportunities for different buyer segments.
For those looking to trade up to larger homes, the uniform percentage drop across all housing categories means higher-priced properties have lost more value in absolute terms, potentially creating favourable conditions for upgrading.
First-time buyers with plans to stay in one location for at least five years can benefit from the combination of low interest rates and reduced house prices, especially as rental costs continue to climb.
Changes to mortgage regulations now require buyers to begin repaying their loans immediately, at least partially on an annuity basis.
While this represents a shift from previous interest-only options, the current low interest rates mean monthly payments remain comparable to previous arrangements.
