The days when we could still bid below the asking price last year are sadly over. Sealed-bid sales are back, and overbidding is the rule rather than the exception. Is it a bubble, are you paying too much? Is it better to wait? Or is it time to strike?
Contents
- Overbidding in Utrecht 2024: is it necessary and if so, by how much?
- What should you bid? The financial preparation
- Why you have to overbid in Utrecht
- Housing market figures 2024
- Update March 2024
- Update June 2024
- Update July 2024
- Update August 2024
- Conclusion: Overbidding in 2024 and future developments
If you're looking for a home in Utrecht in 2024, chances are you'll have to deal with overbidding. The Utrecht housing market has grown enormously in recent years and demand for homes is greater than supply. This has led to a very competitive market. Prices in December 2023 compared with December 2023 showed an 18% rise in the price per m2 in Utrecht. In 2023 I also wrote a blog about overbidding in 2023. Quite a big difference, even if you look at the update I gave there.
Overbidding in Utrecht 2024: is it necessary and if so, by how much?
Overbidding is a strange phenomenon. People often ask: ‘Why don't you just set the asking price higher?’. A fair question, by the way. That would make things a lot easier. Our days would be a lot calmer too, and the disappointment for our buying clients less great. But it's a strategy. Everyone is so used to overbidding and a lower asking price that if the asking price is realistic, people stop coming. They already assume they'll have to overbid and that the home won't fit their budget. I'm also often asked: ‘What % should I overbid?‘. But it's the value that really matters, not the asking price and a percentage of overbidding. Last year it was still genuinely possible to buy a home below the asking price. The market's turning point was more or less the NVM Open House Route in April. It was incredibly busy and the bids came pouring in.
What should you bid? The financial preparation
Overbid or below the asking price?
If you want to overbid on a home in Utrecht in 2024, thorough preparation is essential. I see people just winging it. One of the blogs that is still among the most read is: ‘Offer accepted, now what?’. A house isn't a pack of butter. So prepare well. Start by mapping out your financial situation accurately. This means not only determining your maximum mortgage amount and monthly costs, but also researching the market value of the home.
Although it may be tempting to focus on the amount you can borrow, the market value of the home is crucial. The fact that you may be able to borrow €750,000 doesn't automatically mean that this is the right amount. The home may have a market value of €700,000, which would mean you'd be paying too much. Handy tools on the estate agent's website or via platforms such as Walterliving can help you find out the market value. The market is moving so much at the moment, though, that these reports don't reflect the right amount.
Estate agents have handy tools, but it's important to note that the right comparable properties aren't always used. Based on their knowledge, estate agents can judge whether transaction prices need to be adjusted and whether the homes being compared really are comparable. Consulting an expert to look at the situation with you and determine the current market value is therefore recommended. The housing market evolves quickly, and it's important to know what the home is really worth at that moment, so you can make a realistic offer.
When you're ready to make an offer, acting quickly is very important. Make sure all the necessary paperwork is in order and let the seller know that you're seriously interested. Writing a personal letter to the seller explaining why you're enthusiastic about the home can sometimes make the difference between your offer and those of other potential buyers. It is essential to highlight the following elements in your proposal:
- The concrete offer
- Conditions precedent (the get-out clauses)
- Preferred completion date
- Any items you'd like to take over
Why you have to overbid in Utrecht
In Utrecht, overbidding on the housing market has become the norm in 2024, mainly because of the enormous demand for homes and the limited supply. This phenomenon has led to intense competition among potential buyers, with prices often being paid that are higher than the original asking price. It's crucial to always consider the real value of a home before making an offer, and to get professional advice if necessary.
Housing market figures 2024
The year has only just begun, but for us estate agents it feels like a completely different year and a different market. While the pressure was already increasing considerably at the end of last year, it reached a peak in January and February. The average price per square metre for a home rose by 18% in December compared with December 2022, and in January 2024 the price per square metre for a home is 9% higher than in January 2023. The average transaction price rose by 10.8% in December 2023 compared with 2022, and in January 2024 there was an increase of 10.5% compared with January 2023, which is about the same. In December the average price per square metre was €5,830, while in January it fell to €5,380. That looks like a considerable drop, but we notice that in February the average price per square metre is already back at the December level. With the average prices per square metre, we're even past the peak of April, May and June 2022, before the market dip. So we're already above the historic peak!
In Utrecht, a terraced house costs an average of €609,000 in February, with an average price per square metre of €5,873. An apartment has an average price of €402,000, with an average price per square metre of €5,666. In January 2024 there were 189 homes for sale. In January 2023 there were 450. You could see that these numbers were high last year, between 450 and 500 until July. After that, supply quickly fell again. The numbers for sale were low at the start of 2022. But from April/May supply increased enormously. Supply has fallen by 58% compared with last year.
How much do people overbid on average in Utrecht?
In January 2024 we see here in Utrecht that homes sell for an average of around 6.9% more than the asking price. That means people generally pay more than was originally asked. But it's not just a matter of numbers, is it? A home's features, location and finish also play a role. And now, so far in February, bids are coming in at around 9% above the asking price. In 2022, between February and May, the percentage may have been higher, but asking prices are higher now.
The Utrecht housing market is on the move. Sales figures and prices change monthly, but in general demand is still greater than supply. The scarcity indicator is lower than ever before at 0.8. New-build is progressing somewhat sluggishly because of the high prices and uncertain completion times. Buying agents play a role in the bidding war, with an average of around 12.6% above the asking price being paid when a buying agent is involved. That doesn't mean you'll always pay more with a buying agent, but it does mean that the most popular homes are often bought with a buying agent. It's simply important not just to stare at the asking price, but also to look critically at the value of the home.
Impact of the sell-off wave on the housing market
The sell-off wave among small investors (landlords selling their rental homes one by one) has increased the supply on the sales market, especially for first-time buyers. However, this doesn't automatically lead to more affordable homes. The overheated bidding war and rising asking prices make it difficult for first-time buyers to secure a home. The balance between stimulating the sales market and affordable housing for first-time buyers remains a challenge.
Overbidding first-time buyers are turning out to be little goldmines for investors pulling out. In large cities, overbidding is normal again, especially with small box 3 investors who are selling off their properties. Because of the tax regime and rental legislation, apartments that can't be moved to the free rental sector are increasingly coming onto the sales market, especially below the NHG (National Mortgage Guarantee) limit of €435,000. First-time buyers are finding their way to these homes, which is how small investors sold around 4,600 homes to first-time buyers last year. Asking prices in cities such as Amsterdam and Utrecht are often between €350,000 and €450,000, resulting in bidding wars. First-time buyers, who sometimes overbid by as much as €60,000, can afford this thanks to higher incomes and financial help from their parents. Despite the increasing supply, starter homes remain pricey because of the competitive market and financial support from parents, which is also beneficial for the government in terms of tax revenue.
Update March 2024
Over the past few years we've seen remarkable dynamics in the property market. In March 2022, 253 new homes were listed, a number that increased to 482 in 2023, but then fell again to 242 new listings in 2024.
Even more interesting are the transaction figures. In March 2023 there were 204 transactions, while in 2022 that number was still 237. But strikingly, the number of transactions in 2024 has fallen significantly, to just 153.
The figures become even more fascinating when we look at price development. Last year, in 2023, the average price per square metre was €4,902, but this year it has risen to €5,858, an impressive increase of 19.5%.
It's not only the price per square metre that is rising, but also the average transaction price. From €448,000 in 2023 to €471,000 in 2024, an increase of 5.6%.
Despite these price increases, we see that the homes being sold have become slightly smaller. In March 2023 the homes for sale were 93 m2 on average, while the transactions were 90 m2 on average. In March 2024 the homes for sale have fallen to 90 m2 and the transactions have fallen further to 88 m2.
However, the price increases are also affecting asking prices. Although the asking price in March 2024 was €493,000, a drop compared with January that year when it was still €555,000, we see a remarkable increase compared with March 2022 and March 2023, when the average asking price was €460,000 in each case. .
But there is something peculiar to note: asking prices are starting to fall again. This may mean that, in percentage terms, people will overbid more again. The average asking price of €493,000 in March 2024 is considerably lower than the €555,000 we saw in January, but still higher than the average asking price of €460,000 in March 2022 and March 2023. Overbidding in percentage terms isn't a problem. Certainly not when asking prices are falling. But keep making sure the value and the sums add up.
Update June 2024
Strange things are happening on the housing market. Whereas in May 2022 people were still overbidding by 14.8%, around the same time last year it was 1.5%. At the moment, the average overbid is even back at 12.9%. Supply is even substantially lower than at the market peak in 2022. We now have only 223 homes for sale. In May 2023, 265 transactions took place. In May 2022, 250 transactions took place. In 2024, 275 transactions took place.
Last year the average price per square metre was €5,096. Now it's €6,414. That's an increase of 25.9%. Pretty steep. Our average price per square metre is another 5% higher. Even now that we've sold 5 huge fixer-uppers.
The average transaction price has risen from €428,000 to €520,000. That's an increase of 21.3%. Supply has fallen by 52.2%. This is really going to cause enormous problems.
Overbidding decreased very slightly. Asking prices are rising slightly, and so are the final transaction prices. The average asking price in May 2024 is €528,000
Update July 2024
Despite a slight drop in mortgage interest rates, the housing market remains tight. Compared with July last year, the average transaction price has risen by no less than 21.5% and the price per square metre by 20.1%. Although the price per square metre fell slightly in July 2024 to €6,395 compared with €6,542 in June, competition remains fierce.
In the update you saw a slightly lower average price per square metre. The figures are always adjusted a little afterwards, because transactions are processed later. The percentage of overbids fell only slightly from 14.3% to 13.9%, and the scarcity indicator (KI) improved marginally from 1.1 to 1.2, indicating that the market has become slightly less tight. But still extremely tight. The difference is negligible.
Supply remains limited, however; the number of available homes has fallen by 26.5%, while the number of transactions rose by 7%. This suggests that buyers are still active, despite the limited choice and high prices. Waiting for further interest rate cuts can be risky, especially if house prices keep rising.
Update August 2024
The market is unpredictable. The number of people searching fell. But prices stayed high.
In August 2024 the average overbidding percentage rose to 12.8%, compared with 3.4% in 2023 and 5.3% in 2022. Supply has fallen by 25.9%: from 400 homes in 2022, to 351 in 2023, and 260 in 2024. This drop is leading to more intense competition among buyers and fewer transactions (221 in 2024 compared with 255 in 2023 and 238 in 2022).
The price per square metre has risen by 18.1% over the past year, from €5,268 in August 2023 to €6,224 in August 2024. The average transaction price also rose by 18.1%, from €422,000 to €495,000. The average asking price in August 2024 is €539,000.
Although prices are rising, August is traditionally a less active month for property transactions. Many people take a break, which results in fewer transactions and often lower prices.
The market remains competitive, with falling supply and rising prices. Buyers have to decide quickly, while sellers benefit from the limited availability and higher prices.
Mortgage interest rates are falling. How can you benefit from that and still strike now?
Conclusion: Overbidding in 2024 and future developments
Welcome to Utrecht, where overbidding is the norm in 2024. The dynamics are completely different from the end of 2022 and the start of 2023. The average price per square metre in January 2024 is 9% higher than in January 2023, and transaction prices have risen by 10.5% over the same period. Overbidding is no longer an exception, especially for first-time buyers, who are turning out to be little goldmines for investors pulling out. Small box 3 investors who are selling off their homes are benefiting from this, but the impact on affordable housing for first-time buyers is questionable. Despite increased supply due to the sell-off wave, prices remain high because of an overheated bidding war.
Asking prices are between €350,000 and €450,000, leading to bidding wars in cities such as Amsterdam and Utrecht. The average transaction price in Utrecht is now €475,000. The average asking price is now around €500,000. Many first-time buyers and people moving up the ladder, sometimes with financial support from their parents, bid an average of 6.9% above the asking price in January 2024. Although this percentage seems lower than in 2022, the higher asking prices reflect the new reality. Critical financial preparation is essential for anyone who wants to overbid, with the market value as the crucial point. Let a buying agent advise you and don't fixate on a particular percentage you need to overbid. Sometimes overbidding by 20 to 25% is necessary to secure exactly that lovely home. In short, the Utrecht housing market is evolving fast, and overbidding now seems to be the key, but not without strategic preparation and a realistic valuation. Curious about last year's figures? Read the overbidding in 2023 blog here.
Gusto Casa: Your Utrecht Estate Agent
As the NVM valuer and selling and buying agent of Utrecht, Gusto Casa offers expertise, a feel for styling and local market knowledge. Our reviews testify to our skills and dedication. Let us guide you through Utrecht's dynamic housing market and make your feeling of home a reality. We ‘literally’ pull out all the stops to get the very highest price per square metre for your home. Buying a home? Then we look at how we can do that as favourably as possible and what you can do to eventually make the price per square metre rise;) We're always looking for potential.
