Dutch house prices have remained flat the last few months. The price index has been stuck near 85 since April of this year. According to CBS year over year home prices dropped 4% last month. Home prices are now 20.3% below the record of August 2008.
CBS: Prices of existing owner-occupied dwellings
CBS: Price index of existing owner-occupied dwellings
Corrected for inflation house prices haven’t moved either as Mathijs Bouman showed with another chart on Twitter. According to the chart below home prices corrected for inflation are at the same level as in October 1999. In a post I made about Dutch house prices in June of this year I also noted that the price, corrected for inflation, was the same as in October 1999. While we can speculate about what home prices will do next right now it looks like we have found a temporary bottom at the very least.
Bouman: Dutch house prices corrected for inflation
The Dallas Federal Reserve updated their International House Price Database with the number for the first quarter of 2013 last week. They are tracking house prices since 1975 so this provides for nice opportunity to see where we are standing on a long term basis.
In a in a recent post I mentioned that house prices in the Netherlands are now at 1999 levels adjusted for inflation (blogpost).
These new released numbers from the Dallas Fed show that the Dutch Real House Price Index (house prices adjusted for inflation) are approaching the levels of the last top in 1978. Although I never expect (and hope) that house prices will approach the same level as the bottom of 1985 but it wil be interesting to see if prices will go lower than the top in the 1970s. My argument for this is that Dutch society went in a few decades from having almost only single-income households to now the majority being two-income households. In 2009 the CBS reported that two-income households made up 57% of all households. Two-income households make more money than single-income households. Because of this the amount of money the average household can spend is a lot higher these days and thus they are able to afford a higher price for their house. Source: CBS (PDF)
Just for reference here is also the chart with the Dutch House Price Index from the Dallas Fed.
House prices in the Nethterlands have been declining since the end of 2008. The total decline has been 20.6% since the top according to CBS.
In nominal terms house prices are now at 2002 levels.
Thanks to @mathijsbouman I now have a chart that shows that the average price for a house adjusted for inflation in the Netherlands is now at a level last seen in october 1999. A little calculation that I made based on this chart comes out at a decline of 28% from the top.
Interesting about this is that a few years ago the tax on buying a home has been reduced from 6% to 2% so one could argue that prices of houses are even lower than 1999 levels.
The decline has wiped up all the gains that were made in the housing market by using special constructions to finance mortgages such as interest-only mortgages. A product that became popular after 2000 and which helped home prices to increase. Now only mortgages are available where people have to pay of the loan.
Thanks to the decline of house prices the percentage an average household has to spend every month for their house has dropped from 30% of net income to 20% of net income.
Before 1999 home prices rose mainly because many households went from buying a house on one income to buying a house on two incomes. People would buy houses based on 6-7 yearly income instead of 4. It will be interesting to see if that trend will change.
User snorkel over at huizenmarkt-zeepbel.nl edited an interesting graph about the Dutch housing market with the housing price decline of the past few years. The slide is coming from a presentation given at TU Delft.
So how much lower can and will this go?