House prices '10pc too high'
7 April 2006, AMSTERDAM — House prices in the Netherlands are 10 percent too high, according to a new report by the Central Planning Bureau (CPB).
7 April 2006
AMSTERDAM — House prices in the Netherlands are 10 percent too high, according to a new report by the Central Planning Bureau (CPB).
The government's macro-economic think tank made its assessment by factoring in the interest rate, income and employment levels.
Interest rates are low, a pay freeze is in force, while unemployment is high and is running at over 6 percent of the workforce.
But any concerns about a possible collapse in the housing market are unfounded because home owners are unlikely in the coming years to lower the asking price for their property by 10 percent, the CPB said.
House prices generally are more likely to increase rather than to fall. This is because owners prefer to wait rather than reduce the price significantly of a difficult-to-sell property.
The "downward rigidity" puts a brake on a reduction in price, newspaper NRC reported on Thursday.
The "imbalance" in the market, the CPB said, would decrease in coming years and house prices would fall slightly this year.
House prices have risen sharply in the last 10 years and the average home now costs EUR 215,000, cadastral and mortgage information body Kadaster said.
The CPB noted that the Dutch housing market was not an ordinary free market because of an imbalance between supply and demand. The supply of houses is growing by only 1.5 percent per year and the building time for new homes is "long".
In addition, regulations imposed on residents by municipal authorities acted as a "blocking and delaying" influence on the adjustment of the demand.
The costs associated with buying a house, the CPB said, are "considerable", amounting to about 12 percent of the value of the property.
These costs — largely made up of fees for the estate agent, notary public and the conveyance tax — have a braking effect on house prices. If the costs are lowered, house prices would probably rise, the NRC said.
[Copyright Expatica News 2005]
Subject: Dutch news + house prices in the Netherlands