NVM Chairman Ger Jaarsma: Consumers increasingly giving up due to limited choice and high prices Housing market caught between high demand and shrinking supply Supply of less expensive housing is drying up: first-time buyers facing a closed door There is a specific fall in the number of sales in the lower price classes. Up to 150,000 euro there were 30% fewer properties sold compared to a year ago and in the price class between 150,000 and 200,000 euro there were 13% fewer properties sold. Conversely, in the price class between 400,000 and 750,000 euro there were 13% more properties sold compared to a year ago. Nieuwegein, 11 January The housing market in the Netherlands is becoming increasingly tight. The number of property sales fell in the 4 th quarter of 2017 (- 6%), for the first time since the lowest point during the financial crisis. The property supply is mainly drying up in the less expensive segment. In total, there was 36% fewer properties for sale in the last quarter of 2017 compared to a year ago. Together with the financing rules which have been tightened further, that forms an extra obstacle for first-time buyers in particular in the housing market, said NVM Chairman Ger Jaarsma during the presentation of the housing market figures for the last quarter*. Prices also continue to rise by no less than 9.1% during the last year. An average home now costs 269,000 euro. Nonetheless, they continue to sell like hot cakes, with more than a quarter of the properties even selling in excess of the asking price. And they are changing ownership increasingly faster; during the last quarter an average property was sold within 52 days. The tight supply and the increasing demand, the price increases and the need to offer in excess 1
of the asking price in many major cities has, according to Jaarsma, frightened off consumers from buying. They are no longer willing to stand in the queue for a property and be told on the doorstep that it s already been sold to someone else. During the last quarter consumers had, on average, a choice of 4 properties. And in overheated cities like Utrecht, Amsterdam and Almere the choice was limited to approximately 2 properties. More new-build remains the adage for the coming years in order to prevent the housing market from stalling further, says Jaarsma. Yes, more properties are fortunately being built but because of the low production in recent years we will not be able to resolve the backlog over the coming years. * The latest quarterly figures published by the NVM are provisional figures. Fall in the number of housing transactions Fort the first time in years, the 4 th quarter of 2017 showed a fall in the number of properties sold by NVM real estate agents. During the last quarter they sold almost 6% fewer properties compared to a year ago. Apartments in particular saw fewer sales (- 13.5%). The other property types saw a fall in sales of between 2 and 3%. In the total existing owner-occupied housing market an estimated 61,000 properties were sold in the 4 th quarter of 2017. In 2016, the number of transactions in the 4 th quarter only fell compared to the previous year in 4 NVM regions; in the last quarter the property sales by NVM real estate agents fell, compared to the previous year, in no less than 52 of the 76 regions. For the whole of 2017, the NVM real estate agents sold more than 166,000 existing owner-occupied homes, which is more than 1000 higher than a year ago. With regard to the total existing owner-occupied housing market 234,000 existing owneroccupied homes were therefore sold. 2
Transaction prices increased by more than 9% in a year The transaction price for the average property sold in the 4 th quarter of 2017 hit a new record at 269,000 euro, which is more than 9% higher than a year ago. In particular, the price of apartments sold increased by more than 13%. A substantial increase is also visible for other property types, with rises of between 6% and 8%. The increase in prices for sold properties in the specific NVM regions of The Hague (+20%) and Almere (+18%) has jumped considerably during the last year. In the NVM region of Amsterdam the prices are still increasing but at a lower rate than they have been (+14%). This is partly caused by the current high price level in the capital. In a number of regions to the east of Zwolle (South-West Drenthe, Hardenberg and Almelo) the prices of sold properties have not increased during the last year. 3
Average time on market falls spectacularly to 52 days Within a period of one year, the time on market for an average property sold has fallen from 76 days to 52 days. This fall is visible for all types of property. Detached houses were, on average, sold after around four months; apartments and terraced houses after more than a month. Of all sales in the 4 th quarter of 2017, more than 71% were sold within 90 days. Only 8% of the properties sold during the last quarter had been on the market for a year or longer. 4
More than a quarter of properties sold in excess of the asking price The share of properties sold in excess of the asking price has been experienced an unprecedented upward trend for some time already. Now, almost 28% are being sold in excess of the asking price. A further 17% are also being sold for the asking price. In addition to the normal house hunters, professional and private investors are also active in the housing market, says the NVM Chairman. In the competitive struggle to gain ownership of a property, people are going for the maximum price. Sellers are capitalising on this with competitive asking prices in order to maximise the number of candidates for a property. The difference between the latest asking price and the selling price fell to 0.7% during the 4 th quarter of 2017. Generally, the selling price for apartments is higher than the asking price by 1.1% on average. Properties that are new to the market and which are sold (within 90 days) are, on average, sold for the asking price. These are clear signals of a heated housing market, says Jaarsma. Acute shortage of property supply in large parts of the Netherlands The acute shortage of property supply is occurring in more and more regions in the Netherlands. In the 4 th quarter of 2017 the total number of properties offered for sale in the Netherlands declined further. This drop is slightly less than in recent quarters. Midway through the 4 th quarter of 2017, NVM real estate agents had more than 59,600 properties for sale (total existing owner-occupied housing market 84,000). That is 6.1% fewer than in the previous quarter and 35.6% fewer than in the same period last year. Jaarsma: We have to go back to 2003 to find the number of properties with the NVM below 60,000. The drop is still fastest for apartments, for which there are no less than 47.6% fewer on the market compared to last year. Looking at the distribution of the property supply by property type, the NVM notes that this has changed considerably in relation to the crisis period. Compared with midway through 2013 (when the property supply increased to a record level) the share of apartments within the total property supply has fallen substantially. In mid-2013, 30% of the property supply consisted of an apartment but currently this is only 17%. Conversely, the share of detached houses has increased from 25% to 38% of the property supply. One of the underlying causes is that the housing market has recovered the fastest and strongest in the cities, where apartments form the largest share of the housing stock, 5
says the NVM Chairman. The major demand for apartments has ensured that the supply of these types of property has reduced rapidly. The demand for detached houses has not increased as fast, which means more time is required to eliminate the old stock of detached houses. 6
Average asking price has increased in a year by almost 10% Compared to the same period last year, the average asking price for owner-occupied homes increased by 9.1% in the 4 th quarter of 2017. The asking price in this quarter was 353,000 euro. The figures are even more extreme for apartments: within a year the asking price for apartments on the market has increased by 18.2% to 231,000 euro. Due to the scarcity in the market as a result of substantial price increases, an apartment is now, for the first time since records started in 1995, on the market at an average asking price that is higher than other property types. At almost 711,000 euro, Het Gooi is still the region with the highest average asking prices for properties on the market. The region with the lowest average asking price is North-East Groningen: 181,000. At the same time, the asking prices here have remained almost the same, with the year-onyear development only amounting to 0.3%. That contrasts sharply with the region with the highest price development in a year The Hague where asking prices have increased by more than 35%. 7
Consumers can only choose from 4 properties The NVM shortage indicator has dropped from 6.0 to 4.1 in a year. A shortage indicator of 4.1 means that the consumer can choose from 4.1 competing properties on the market. The housing market in the Netherlands has therefore moved from a balanced to a tight housing market, says Jaarsma. Due to the supply shortage and the high number of transactions it is becoming increasingly difficult for many consumers to find a suitable home. In areas in and around Amsterdam, as well as in a city like Groningen, buyers can only choose from 2 or less properties. On the other hand, there is North-East Groningen and Den Helder/Texel where the shortage indicator exceeds 10 and there is still an ample market. But even here the property sales are picking up and the property supply is reducing rapidly. Consumers looking for an apartment or terraced house have the least choice (indicator = 2.6). The widest choice still remains with detached houses (shortage indicator = 10.7). Incidentally, the NVM Chairman adds for sake of the certainty, that there are major differences regionally. 8
More and more regions experiencing an overheated market Despite the differences, according to Jaarsma the housing market in an increasing number of regions is picking up substantially. Sometimes a bit too much, he says, Because where in the past a majorly dynamic region such as Amsterdam or Utrecht would still be regarded as positive, the situation has now become so overheated that a healthy housing market no longer exists. This situation is occurring in an increasing number of regions located in the northern half of the Randstad. In urban regions outside of the Randstad there is also increasing evidence of an overheated market. According to the NVM Chairman, there is still evidence of a reasonably relaxed housing market in the periphery of the Netherlands. 9
Housing shortage will peak in 2018 with a shortage of 200,000 homes The Netherlands is facing a major housing shortage due to a lack of new build. The NVM regards this as the greatest obstacle in the housing market. The housing shortage is expected to peak in 2018 with a shortage of 200,000 homes. Jaarsma: The production of new-build owner-occupied homes is increasing, from approximately 50,000 properties per year in the period 2012-2017 to an expected 70,000 per year for the ten years after that. However, this production will hardly make up for the major housing shortage. The NVM is therefore urging the construction of around 80,000 new-build homes per year, of which around 60,000 should be owner-occupied homes. It is expected that this level of production would reduce the housing shortage by around 2025 to an acceptable 100,000 homes. Sources: ABF Research, CBS, NVM Increasing new-build production good for catching up on the housing shortage In the last quarter of 2017 more than 8,100 new-build homes were sold via NVM real estate agents. In the whole of 2017, 31,000 new-build homes were sold, which means around 44,000 project-developed new-build homes for the total market. After adding in the sale of private plots it is expected that around 55,000 new-build owner-occupied homes will be realised. The increasing transaction numbers are being fuelled by a conspicuously high new supply 2017. In total, around 35,000 new-build homes were put on the market in 2017 via one or more NVM real estate agents. 10
Source: NVM Persistent price increases for new-build homes The average price paid in the last quarter for an average new-build home was 328,000 euro (2,550 euro per m2); an increase of 14% compared to a year ago (the squaremeter price has increased by 11%). The autonomous price development is being boosted by an increase in new-build in the expensive (urban) regions of the Netherlands and a focus on developing large homes. Source: NVM 11
Baby boomers buying more new-build The current housing shortage is main quantitative. However, a qualitative housing shortage will threat in the long term. The families share is reducing and the share of young people but especially of older couples and single persons is increasing. In recent years many medium priced to expensive single-family dwellings have been developed which have mainly been bought by families. Jaarsma: However, even childless baby boomers born between 1945 and 1955 are living in spacious owner-occupied singlefamily dwellings, often in the less overheated housing markets. In due course, they will start thinking about moving and if the housing market is once again ample at that moment, then there will be a threat of a surplus of single-family dwellings in certain areas of the Netherlands. In time, baby boomers may therefore encounter problems selling their home and finding a suitable alternative home. According to the NVM Chairman, in order to get ahead of these problems, baby boomers should already be tempted into moving. Some of them are already doing that. The NVM is seeing that an increasing number of older couples and single people are buying, which is a phenomenon we are mainly seeing in the new-build sector. This target group s increasing activity is coupled with a clear increase in the number of sold new-build apartments in 2017, and in particular apartments with a living area of 90 to 120 m2. These larger apartments are often bought by predominantly well-off older households. 12
Sources: NVM, Experian Living preferences for baby boomers are complex Building (medium-sized to) large owner-occupied apartments is only one way of approaching the future qualitative housing shortage. The living preferences of the baby boomer generation are complex and too diverse to be contained within a single housing segment. Jaarsma. Many of them place a great deal of value on having a garden and/or living on the ground floor. Existing apartments perhaps do not adequately meet the living preferences of the baby boomer generation. Simply building apartments is clearly too limiting to accommodate the diverse living preferences of the older generation. How can the benefits of an apartment be combined with the benefits of a house? Can new-build solve this or is it necessary to adapt existing properties? The Netherlands does not have a single housing market and the baby boomers are not a single homogenous target group. The NVM is calling on local authorities and market players to enter into dialogue with NVM real estate agents and NVM new-build specialists in order to answer this question locally. Fast decision-making about new-build is needed Due to the increasingly large supply shortage and corresponding rise in prices, the living preferences of the consumer are becoming more and more difficult to achieve. A substantial increase in building production is required in order to solve this problem, says NVM Chairman Jaarsma. In the first instance, this requires executives and politicians to have a shared feeling of the urgency and o have a willingness to take the plunge. Build times are becoming shorter and shorter through the use of innovative technology. However, in practice it is the political decision-making process in particular that forms the greatest obstacle for being able to quickly complete building projects. The NVM expects that the State Government will take control in the coming year in order to make agreements with provinces and municipalities about achieving suffice house building. This will not be just be about including sufficient planned capacity but also about the actual approval of building projects and the setting of realistic conditions for market players. 13
Delayed new-build placing pressure on housing supply and causing price increases Despite the fact that new-build is gathering steam, Jaarsma says that a major housing shortage will remain for the coming years. The backlog that has accrued during the year in which hardly anything was built is taking revenge. The outcome is that we will see the housing supply compared to demand continue to shrivel up further in the coming year, and prices will continue to increase. NVM expects fewer transactions in 2018 The NVM does not expect the number of transactions in 2018 in the existing owneroccupied housing market to exceed the record level of 2017. The NVM expects to sell 5% to 8% fewer properties compared to 2017, which is mainly due to the lack of sufficient increase in the number of properties on the market. We expect the price of sold properties to increase nationally by an average of 6% to 7%, says Jaarsma. Number of NVM real estate agents remains static At the end of 2017 the NVM had a total of 4,200 real estate agents and valuers, 17 more than a year ago and the same number as in the previous quarter. Of these, 3,690 are active in the housing market. The number of office affiliated to the NVM at the end of December 2017 was 3,075, which is 11 more that in the previous quarter and 79 more compared to a year ago. Of these offices, there are 2,714 active in the housing market. The remaining offices are active in the commercial or agricultural property sectors, for example. Note for editors: For more information please contact Roeland Kimman, communications, media and spokesperson. Telephone +31 (0)30 6085 185, mobile +31 (0)6-55 205 205 E-mail: kimman@nvm.nl 14