House prices in the Netherlands have now declined for the third month in a row, according to new figures from national statistics agency CBS. And at the same time, people who want to buy a house in the Netherlands are opting for shorter fixed-rate terms for their mortgages, as interest rates continue to rise.
The month-on-month drop in house prices was 0.5% in October, and the average price paid for an existing property has now fallen to almost €430,000, the CBS says. This is a decline of some €18,000 on the end of July peak.
In fact, prices have now been levelling off year-on-year for six months as the overheated housing market in the Netherlands slows down. Fewer properties changed hands last month as well. Almost 15,000 deals were reported to the land registry office in October, and that is down 8% from a year ago. The decline is even stronger when the first 10 months of the year are taken into account, at 17%.
The change in pace has been prompted by rising interest rates which have reduced the amount people can borrow. And this is also having an impact on the type of mortgage people are signing up for.
At the same time, according to new figures from the Dutch central bank DNB, variable rate mortgage loans or fixed rate loans of up to one year are becoming increasingly popular with home buyers in the Netherlands.
In September 2022, Dutch banks granted €1 billion worth of new mortgages with variable or very short-term interest rates, a rise of 47% in January when interest rates really started rising.
And that means long-term mortgages are out of favour. Banks agreed to €2.4 billion in mortgages with fixed rates of more than 10 years in September, which is down 41% on the January figure.
“With interest rates now rising rapidly, new homebuyers are locking in interest rates for a shorter period, generally also at lower rates than for a long fixed-rate period”, the central bank said.