The Utrecht housing market remains exciting and challenging. House prices in Utrecht are rising enormously. We already wrote a forecast for the housing market in 2024. The housing market is busy. But there may also be an opportunity for you as a buyer. In summer the pressure often eases a little. There are fewer excesses, and it's only at the end of August/start of September that the pressure increases again. We've lined up the figures for June 2024 compared with the two years before for you. We also have some important developments on the housing market.
Overbidding is well and truly back
In June 2022, people overbid by 12% on average. After a dip to 1.5% in 2023, we now see a sharp rise again to 14.9% in 2024. This means buyers once again have to compete hard to secure their dream home.
The number of available homes fell drastically from 467 in June 2023 to 286 in June 2024, a decrease of 38.8%. This limited supply is pushing prices up further.
The number of home sales has fallen from 314 in June 2022 to 289 in June 2023 and further to 250 in June 2024. This shows that fewer homes are being sold, partly due to the limited supply and rising prices.
The average price per square metre rose from €5,233 in June 2023 to €6,599 in June 2024, an increase of 26.1%. The average transaction price also went up, from €463,000 to €558,000, an increase of 20.4%.
The average asking price in June 2024 is €533,000. Despite fewer viewings for larger homes, prices keep rising. We advise buyers to stay realistic and not to count too much on outliers.
National figures, trends and developments
NVM quarterly figures
Nationally, the average house price rose to €468,000 in the second quarter of 2024, an increase of 13.6% compared with last year. Expensive regions such as Gooi en Vechtstreek and Greater Amsterdam in particular are seeing strong demand.
The Affordable Rent Act: it's a complex problem
With the introduction of the Affordable Rent Act (Wet Betaalbare Huur) on 1 July 2024, the government is intensifying price regulation on the Dutch rental housing market. This resembles other countries where price regulation led to scarcity and a black market, as with rice in North Korea or chicken in Venezuela. Because of the regulation in the Affordable Rent Act, many landlords will sell their homes. Alongside the Affordable Rent Act, the Fixed-Term Tenancy Act (Wet Vaste Huurcontracten, which abolished most fixed-term leases) also came into force on 1 July 2024. So you can charge less rent, and then you can hardly get a tenant out of your home any more. You're no longer flexible and you can't check at all whether a tenant is a pleasant tenant.
The extra tax in BOX 3 even means that many rental homes have a negative business case. If an investor sells his home, he can get top price and earn a return elsewhere. Because of the unreliable government, many investors are choosing to do this. We see many people selling their homes and investing their money in property in Spain.
The black market for rental homes
The Netherlands already meets the conditions for a black market: regulated prices below market prices and evasion of the rules. Rental homes are sometimes already let above the WWS maximums (the points-based rent caps). This was already happening. Even without the Affordable Rent Act. There were excesses, but a great many landlords charged a perfectly fair rent. They had a nice home and this was their pension. There's a big fear that precisely the people who didn't care much about the law anyway will now start letting their homes off the books. The number of available homes is falling enormously. The choice is renting a house off the books, without being registered, but with a roof over your head. Or becoming homeless. Out of desperation, people will choose illegal rentals. But that leaves them without any protection. No contract, no registration. I hope the scenario being sketched here won't come up much. But I fear the worst. There are too few homes and the people who can't buy a home have nowhere left to turn.
Fewer children: is that because of high house prices?
Suddenly there were headlines that fewer children were being born because of high house prices. Sometimes I really doubt the quality of journalists in the Netherlands. I often really get the impression that the journalists who write about the housing market are themselves slightly frustrated with the housing market. They write what they ‘feel or think’. But in pieces about the housing market I often really miss thorough research, or you see the figures being explained wrongly.
We don't want children ourselves. I hear more and more people who don't want children, and I also hear people voicing their worries about the world. Would it then only be high house prices that contribute to a lower birth rate? Or is it mainly developments in the world? In the past, people with children also sometimes lived with their parents, children and all, because they couldn't find a home.
Higher house prices are linked to a lower birth rate, according to the demographic institute Nidi. Between 2010 and 2022 house prices rose, while the birth rate fell from 1.64 to 1.24 children per woman. This decline is attributed to the housing crisis, in which young adults find it harder to find a suitable home in which to start a family.
However, another important factor may be women's labour participation. In the same period, labour participation rose, which contributes both to higher house prices and to a falling birth rate. Dual-income couples can pay more for a home, while working women often have fewer children. In Amsterdam, with lots of dual-income couples, house prices are higher and the birth rate is lower than in the Bible Belt, where women more often stay at home for the family.
From the '90s onwards, childcare became more accessible. That meant household income rose, because women started working more. On average we always spend around 30% of our household income on our housing costs. At the time, this led to a considerable rise in house prices.
A drop in first-time buyers with an NHG mortgage
In a year in which house prices rise, the percentage of NHG mortgages (with the National Mortgage Guarantee) normally falls. This year the decline is going faster than in 2023, mainly because of the ever-tighter housing supply, especially in the price range up to 300,000 euros. The share of NHG mortgages for single first-time buyers and for first-time buyers who renovate and/or make their home more sustainable is also falling. Overbidding leaves less money for renovations, and uncertainty about solar panels and heat pumps is holding back sustainability improvements.
Annual adjustments to lending standards and higher NHG limits have contributed to an increase in applications from first-time buyers, but the overall situation remains challenging for young people and others on a lower income. Mortgage advisers aren't seeing an increase in cancelled purchases despite overbidding, thanks to good preparation by bidders. Where do you think the NHG limit is going? The limit is currently €435,000. With energy-saving measures the limit is even €461,100. The limit keeps shifting a little. I expect the limit to go to €450,000.
Lenders and mortgage conditions
Competition on the Dutch mortgage market remains fierce, with around forty lenders. Some are adjusting conditions to stay competitive, such as increasing the maximum bridging loan and shortening the period over which double housing costs have to be demonstrated. The duration of a construction deposit and the period for interest compensation are being extended. In addition, some lenders are raising the interest rate on interest-only mortgages, which the ECB regards as risky. For months I've been hearing people shout that mortgage rates are going to fall.
We also see people constantly looking this up on Google. People are waiting for the drop. We're a bit nerdy and share Utrecht housing market news on LinkedIn every week. For weeks/months in a row, we've seen the rate at Rabobank stay the same. The other rates keep rising and falling very slightly. But they've also been at the same level for weeks/months. So what are we waiting for? And if it really does fall significantly. Won't house prices then rise extremely fast along with it?
Summer holidays
Every year around the summer holidays we see the number of viewings drop a little. People are busy with their holidays. Often they've lost heart. They park the house hunt for a while and carry on full of fresh courage at the end of August/start of September. So buying a home during the summer holidays can be very favourable. You may have a bit less competition. House prices in Utrecht are always less predictable during the summer holidays. There are outliers, but because it's often less busy, the final transaction price can also be a bit disappointing.
Conclusion
The housing market in Utrecht remains challenging, with rising house prices and limited availability. Summer may offer buyers some relief thanks to less competition. Even so, the overall trend of higher prices and falling availability remains an important factor. Overbidding is common again, with an average overbid of 14.9% in June 2024. For July, the average overbid is 12.1%.
Nationally, house prices keep rising and new rental laws add extra complexity. The situation for first-time buyers is difficult, with falling numbers of NHG mortgages and limited financing options. Mortgage conditions are changing, but interest rates remain stable for now.
Buyers need to be well prepared and act strategically, especially during the summer months, to navigate this dynamic market successfully.
