Finance

Houses almost 18 percent more expensive in August, strongest increase in 21 years

According to the Central Bureau of Statistics (CBS), this is the largest price increase since September 2000.

New records

Over the past six months, house prices have risen by double-digit percentages to new record highs. A house is now on average 78 percent more expensive than in 2013, when house prices reached their lowest point.

Fewer homes also changed hands in August. The number of home sales fell by 9 percent to 17,257 transactions, Statistics Netherlands and the Land Registry announced. This concerns existing houses, new construction is not included.

Political theme

Owning a home is becoming affordable for fewer and fewer people due to the sharp increases. This makes it one of the biggest political themes for a new government to be formed.

To solve the housing shortage, the caretaker cabinet is making an additional 1 billion euros available to boost housing construction, it was announced on Budget Day. But in his Speech from the Throne, King Willem-Alexander said that the overstrained housing market is a problem that cannot be solved quickly.

Various organizations stated in responses to Budget Day that the extra billion is still far from enough to combat the housing shortage. Real estate association NVM argues for hard performance agreements between governments.

Director Taco van Hoek of the Economic Institute for Construction warned that the number of homes completed this year will remain at 63,000, while about 100,000 homes should be added each year. According to him, there is also a lack of construction sites.

Low interest cause

But others point out that a lack of housing is not the main cause of the accelerating increase in house prices. Mortgage interest rates are also historically low and home buyers can borrow more from the bank.

Low interest rates also make a house more interesting as an investment because bonds yield little. In addition, critics, including President Klaas Knot of De Nederlandsche Bank, argue in favor of phasing out benefits for homebuyers such as mortgage interest deduction more quickly.

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