PRESS RELEASE To From : Finance/economics editorial departments and trade press : Dutch Association of Real Estate Brokers and Real Estate Experts (NVM) Subject : NVM housing market figures Q3 2015 Date : Nieuwegein, 8 October 2015 Surprisingly high number of transactions in slow summer months Consumer confidence and low interest rates give further boost to housing market Expected figures for 2015: approx. 185,000 houses sold and more than 4% price increase Nieuwegein, 8 October - In the wake of an exceptional first two quarters, the third quarter of 2015 has also shown a high number of transactions. This is remarkable, since the housing market is traditionally slower in summer than in spring and we expected transactions to dip as a result of the stricter regulation introduced in July, including the Nibud debt-to-income limits and the National Mortgage Guarantee, says NVM Chairman Ger Hukker. The NVM recorded a total of 36,277 sales of existing owner-occupied homes, a rise of 27% compared to a year earlier. For the total existing owner-occupied homes market, the figure is estimated to be 47,500 transactions. In the last four quarters, the NVM s own brokers recorded a total of almost 137,500 transactions for existing owner-occupied homes (figure for the total market: 180,000 transactions). In Q3 2015, house prices fell slightly by 0.3% compared to the previous quarter. Compared to a year earlier, prices have improved by 4.2%. The price of the average home sold remains almost 12% down on pre-crisis levels, but 8% higher than at its lowest point. The average time to sale is now 98 days, having dropped sharply. The downward trend in housing supply has continued. Midway through Q3 2015, more than 133,000 homes are being marketed by NVM brokers. This is a sharp drop of 12.6% compared to a year earlier. In Q3 2015, the asking price fell only very slightly by 0.1% compared to a year ago. 1
* The latest quarterly figures published by NVM are provisional only. Best third quarter for sales in 8 years Following an excellent first two quarters, home sales remained high in the summer quarter. Hukker: This makes it the best third quarter since 2007, in other words before the crisis. The measures introduced on 1 July that limited the finance options for house-buyers even further, such as the reduction in the National Mortgage Guarantee limit, would appear not to have caused a fall in the number of transactions. The fact that the number of transactions exceeded NVM s expectations is mainly due to the impact of the changes in early July. The effect of the further restrictions on finance introduced at that time was not only reflected in increased activity in the housing market in the weeks leading up to it, but also in the weeks immediately following it, says the NVM Chairman. In the final weeks of Q3 2015, the housing market actually performed as expected. The proportion of mid-terrace houses sold as a percentage of sales fell to its lowest since records began. Only 26.7% of homes sold were mid-terrace homes. During the crisis, that figure was two percentage points higher and averaged 30% in the pre-crisis period. The proportion of end-terrace homes is also falling to a lesser extent. However, apartments are showing a rising trend. In Q3 2015, 31.5% of homes sold were apartments, making this the most-frequently sold type of home. The proportion of detached homes sold increased by 14.1%, the highest figure since 2007. Aantal verkochte woningen Number of homes sold Number of transactions increase by 67% in the space of two years In the last four quarters, NVM brokers sold almost 137,500 existing owner-occupied homes (estimate for total market: 180,000 homes). This means that the number of homes sold on an annual basis is just 5% lower than the NVM s pre-crisis figure, explains Hukker. Since the housing market reached its lowest point in mid-2013 (when the number of homes sold on an annual basis by NVM brokers was around 82,000), the number of transactions has risen by 2
67%. Hukker: If we compare the number of sales on an annual basis with the figure just before the crisis, the number of apartments sold annually has again reached similar levels. The figures for semi-detached and detached homes are also approaching pre-crisis levels, at 3% and 4% lower than the level just before the crisis respectively. For mid-terrace homes, the number of transactions on an annual basis is now 10% below the level just before the crisis. Ontwikkeling aantal verkopen (t.o.v. een jaar eerder) Trend in sales (compared to a year earlier) Landelijk National Regionaal Regional 35% tot 45% 35% to 45% 25% tot 35% 25% to 35% 15% tot 25% 15% to 25% 3
Prices of detached homes playing catch-up In Q3 2015, the average sales price was EUR 224,000. The average price for detached homes sold was EUR 352,000, while the figure for apartments was EUR 175,000. Prices have improved by around 8% since the lowest point of the crisis. Since then, apartment prices have increased by almost 10%. Prices of detached homes are currently playing catch-up and are now almost 8% higher. Compared to the peak just before the crisis began, prices remain down by an average of almost 12% (with apartments down by just over 8%). Hukker: In the last six quarters, the price of homes sold on an annual basis has remained around 4% higher than in the year before. In Q3 2015, prices are 4.2% higher than a year ago. An upward trend in prices is therefore clearly visible. As indicated earlier, the price of detached homes is currently playing catch-up. In the space of a year, the price of this type of home has increased by 5.2%, primarily as a result of the sale of, on average, larger detached homes. Despite that, the supply in this segment is still high and it remains to some extent a buyers market, as asking prices continue to fall. The other property types saw price increases vary from 3.3% for end-terrace homes to 4.4% for apartments. Prijsontwikkeling (t.o.v. vorig kwartaal) Gemiddelde over laatste 4 kwartalen Price trend (compared to previous quarter) Average over the last 4 quarters 4
Prijsontwikkeling verkopen (t.o.v. een jaar eerder) Landelijk Regionaal Trend in sales (compared to a year earlier) National Regional Average time to sale less than 100 days for the first time since 2008 The time to sale for the average home sold was 98 days (more than three months) in Q3 2015, the first time since late 2008 that this figure has not exceeded 100 days. Since 2010, midterrace houses have been the fastest-selling type of home with an average time to sale of 68 days in Q3 2015. Figures this low have not been seen since 2008. Traditionally, detached homes take the longest to sell, with an average figure of 177 days this quarter. Apartments take an average of 94 days to sell. Difference between asking and sales price continues to fall Increasing numbers of properties are selling for the initial asking price and more homes are also selling quickly. The difference between the original and final asking price continues to fall. Experience has shown that the difference between the asking price and sales price ultimately ends up very slightly higher. For less expensive property types, the original asking 5
price/sales price difference is around 4% and that figure is again even lower for apartments, explains the NVM Chairman. The difference between the final asking price and the transaction price ultimately comes out at 3.8%. The difference is lowest for apartments (2.6%) and highest for detached homes (6.2%). Concern among large group of sellers The positivity is not shared by everyone on the housing market. There is still a large group of properties more than 61,000 with NVM brokers that have been on the market for a year or more. A large proportion of these homes have seen very little interest from potential buyers. Hukker: In many cases, the asking price for these properties remains too high. Increasingly, the lack of interest in these properties is due to factors such as unpopular locations or types of property. These properties therefore remain the most important cause for concern in the current housing market. The average property in the current market still takes around 11 months to sell. Verkooptijden verkochte woningen (in dagen) Time to sale for sold homes (in days) Housing market falls for three years without interruption Midway through the third quarter of 2015 (the reference date for housing supply), there were 133,133 existing homes for sale with NVM brokers. The total supply of existing properties currently on the market is estimated to be 175,000. This means that the downward trend is continuing. Hukker: Since Q2 2015, the number of detached homes on the market has exceeded the figure for any other type of property for the first time in 7 years. In the interim period, apartments were always the most strongly-represented type of property on the market. In Q3 2015, 29.3% of all homes for sale are detached homes. In relative terms, there are increasingly fewer mid-terrace homes available. Before the crisis, 21 to 22 of every 100 homes on the market were mid-terrace homes, whereas the figure is now just 18. 6
Ontwikkeling aantal woningen in aanbod (x1000) Trend in housing supply (x1000) The number of homes on the market has shown a downward trend for almost 3 years. In late 2012, NVM brokers had a record number of more than 176,000 existing owner-occupied homes for sale. Since then, the supply has fallen by more than 33,000 homes, or almost 25%. The fall in the housing supply appears to be accelerating, says Hukker. In any case, the annual fall in the supply of 12.6% is a record for this century. That is more than 19,200 homes fewer at NVM brokers. The cheaper the type of home, the greater the fall in supply in the space of a year. The supply of the cheapest type of home, apartments, has seen the largest annual fall (17.7%), followed by mid-terrace homes (14.1%), end-terrace homes (13.3%), semi-detached homes (11,1%) and, finally, detached homes (6.7%). 7
Ontwikkeling aantal woningen in aanbod (t.o.v. een jaar eerder) Landelijk Regionaal meer dan 14% daling down by more than 14% daling 9% tot 14% down by 9% to 14% daling 5% tot 9% down by 5% to 9% daling 0% tot 5% down by 0% to 5% stijging up Trend in housing supply (compared to a year earlier) National Regional 8
Asking prices begin to rise again Midway through the third quarter of 2015, the asking price for the average home available for sale was EUR 276,000, a slight increase of 0.3%. According to Hukker, it is uncertain whether this increase is set to continue, but the fall in asking prices seems to be over. The asking price for the average apartment is EUR 165,000 and the figure for the average detached home is EUR 438,000. Hukker: Asking prices for homes currently on the market differ significantly from the transaction prices. The group of houses that are selling differs in terms of its make-up from those currently on the market. This varies by type of property and by region. Since the start of the crisis, the asking price for the average home on offer at NVM brokers has fallen by 12.6%. Less choice for house-buyers The NVM shortage indicator provides an approximation of the options available on the housing market for potential buyers. Hukker: The market in existing owner-occupied properties is on the up. As a result, the options available to consumers are becoming increasingly limited. In Q3 2015, the shortage indicator figure is 11. Although this represents some stabilisation compared to the previous quarter, it is still five points lower than a year ago. The choice is most limited for mid-terrace homes (7), and still the greatest for detached homes (23) Although the market has seen some improvements in the last year, it cannot yet be described as a sellers market, says Hukker. For that to happen, the shortage indicators will need to fall further to 4-5, which we certainly do not expect to see in the near future. However, there are some regions and market segments where we have seen a return to a sellers market, for example Amsterdam, Utrecht, Haarlem, Leiden. 9
Krapte-indicator Hoeveel keuze heeft de consument? Landelijk Regionaal Shortage indicator How much choice do consumers have? National Regional Number of home moves remains lower than before the crisis Despite the significant increase in the number of existing owner-occupied homes sold in the last two years, the number of people moving home has yet to reach pre-crisis levels. Before the crisis, on average 1 in every 20 households sold their home each year, whereas that figure is currently around 1 in 25. There are various reasons for the relative sluggishness of the existing owner-occupied housing market compared to the past, including negative equity (or the potential for it), high levels of unemployment or the threat of it, a lack of savings and an inability to find a suitable replacement home. These are just some of the potential reasons. If we can solve these problems, many households will still be able to achieve their housing aspirations, says Hukker. 10
New housing picks up sharply The sales of new homes are experiencing a rapid recovery: the number of transactions has more than doubled since the start of 2013. The situation has progressed to such an extent that, in much of the Randstad, growth is being inhibited by a lack of new supply, explains the NVM Chairman. Builders, project developers and municipalities in these areas are struggling to keep pace with the speed of recovery. During the crisis, the number of people employed in construction and project development almost halved and new housing projects shrank considerably. The overheating only occurs in certain areas, but the recovery of new housing is clearly visible even outside the Randstad. In 2015, increasing numbers of larger and more expensive types of homes are being sold. Existing home-owners are cautiously gaining the confidence to buy newly built homes. Semidetached and detached homes are gaining in market share at the expense of apartments. In Q3 2015, an equal number of homes were sold in the price segment above 300,000 as in the segment up to 200,000. Prices higher in provincial capitals than elsewhere With the exception of Flevoland and Gelderland, average prices of mid-terrace homes in all provincial capitals exceed those in the rest of the province. In addition, house-buyers in the provincial capitals have less choice in terms of supply. The ratio of supply to transactions (and therefore the choice for buyers) is lower in all provincial capitals than in the surrounding provinces, with the exception of Lelystad. Price differences are the greatest in Limburg, where buyers pay an average of EUR 77,000 more for a mid-terrace home than in the rest of the province. In Noord-Holland and Zuid-Holland, the price difference exceeds EUR 70,000. Only Flevoland a mid-terrace home in Lelystad is on average EUR 34,000 cheaper than in the surrounding province - and Gelderland (Arnhem EUR 7,000 cheaper) stand out from the crowd. Transactieprijs tussenwoning Transaction price for mid-terrace homes 11
3 e kwartaal 2015 3rd quarter of 2015 Provincie Province Hoofdstad Capital Groningen Groningen Friesland Friesland Noord-Brabant Noord-Brabant Zeeland Zeeland Zuid-Holland Zuid-Holland Noord-Holland Noord-Holland Utrecht Utrecht Overijssel Overijssel Flevoland Flevoland Gelderland Gelderland Drenthe Drenthe Limburg Limburg Krapte-indicator tussenwoning Shortage indicator for mid-terrace homes 3 e kwartaal 2015 3rd quarter of 2015 Provincie Province Hoofdstad Capital Urgent action needed on housing supply The NVM is concerned about the trend in housing supply in relation to the current and especially future demand for suitable housing and people s housing preferences. It has been highlighting the lack of middle-segment rental homes for some time. In addition, several regions have waiting lists for public-sector rented properties. Although the number of public- 12
sector rented homes available for rent is sufficient to meet the needs of specific target groups, there are fears that waiting lists are set to increase. Hukker: Because of a lack of sufficient alternatives for households that have outgrown the need for affordable housing of this kind, insufficient numbers are moving out of the social rental sector. This is compounded by the fact that the current increase in the number of asylum seekers is expected to result in additional demand on the housing market in the future from those granted asylum. According to the NVM Chairman, the response to this kind of acute development often fails to take sufficient account of long-term policy. These kinds of situations often seem to automatically trigger unilateral calls for the rapid construction of additional public-sector rented houses, or temporary housing units, says Hukker. However, the question remains as to whether there is really a long-term need for more public-sector rented houses, or whether middle-segment rental homes would be more appropriate. Without careful policy, focusing further into the future, a mismatch will emerge between demand and supply on the housing market. The NVM would like to see the government, market players and civil-society organisations join forces to ensure that any short-term solutions are properly aligned with future-proof housing policy. Ultimately, it comes down to the question of how we ensure that the decisions we make now for solving waiting lists also help contribute to an effective housing market in the future. Our recent report on the options for transforming vacant office accommodation also calls for the same. We will be happy to contribute our ideas on this issue. Government plans for the housing market At the time of going to press, the Dutch House of Representatives was debating with the Minister for Housing and the Central Government Sector on the government s plans for the housing market, presented on budget day. The NVM welcomes the announcement that the exemption from gift tax on the purchase of a house is again being extended, this time permanently. The temporary extension expired last year and the NVM was already calling for its continuation. Hukker: Better late than never. This move will reduce mortgage debt on the purchase of a house. It will also enable some households to pay off their negative equity. There are indeed many such households, particularly among those aged just above 40. In that sense, it would also make sense to increase the age limit. It would also help if the measure could be introduced as early as next year, in order to prevent evasive action by means of all kinds of legal constructions. The year 2015 set to end on the up The trend that started at the end of 2013 after a deep fall of increased property sales and rising prices is also set to continue into the final quarter of 2015, according to NVM Chairman Hukker. Despite the bumps in the road we have outlined that could inhibit continued growth, I remain generally optimistic about overall housing market trends. Although there may be regional differences, the general trend is one of growth. According to Hukker, consumer confidence and economic stability are creating the right conditions for the Dutch housing market to flourish. In addition, mortgage interest rates are still at historically low levels and new mortgage providers are helping to stir up the market. In general, prices on the housing market are becoming increasingly realistic, partly in response to the advice of NVM brokers, and this is helping to prevent unsaleability and excessive expectations. 13
Hukker expects to see 2015 also to end on the up. He anticipates that around 145,000 homes will have been sold by NVM brokers by the end of the year. The figure for the total market would then be around 185,000 homes. For 2015 as a whole, Hukker expects to see an average price increase of between 4 and 4.5% compared to 2014. Further increase in the number of NVM members In Q3 2015, the number of NVM- affiliated brokers increased by 29, and by 93 compared to Q3 2014. The NVM currently has 4,040 brokers. Of these, 3,561 are active in the housing market. At the end of September 2015, the number of NVM-affiliated branches was 2,902, which is 23 more than the previous quarter and 92 more compared to September 2014. Of these, 2,622 are active in the housing market. The other firms operate in areas such as commercial or agricultural property. Note to editors: For more information, please contact Roeland Kimman, Communication, Media and Representation. Telephone +31 (0)30-6085 185, mobile +31 (0)6-55 205 205 E-mail: kimman@nvm.nl The press conference on the NVM Housing Market Figures for Q4 2015 will be held on Thursday, 14 January 2016. 14