Dutch Property Market Proving Sluggish
23 August 2011
Despite recovering well from recession, now with a stable economy and low inflation the Dutch property market is still sluggish. According to research from Statistics Netherlands and the Dutch Association of Real Estate Agents, property prices fell everywhere in June, except Amsterdam where they grew 4.2% year on year and the Hague where they grew 2.12%. Rotterdam and Utrecht saw the biggest declines, with year on year drops of 3.75% and 1.9% respectively.
The poor performance is being attributed to the European Central bank increasing interest rates to 1.5% which resulted in mortgage rates in Holland increasing to an average of 4.68% in June.
In an attempt to boost the residential property market, the government recently cut purchase tax on existing properties from 6% to 2%, and this measure will remain in place until June next year. Property sales are now expected to increase by more than 10% in the third quarter of this year compared to last year, due to this tax cut, but prices are still expected to fall further during the second half of this year.
Although the Dutch economy contracted by 3.9% in 2009, it grew by 1.7% last year, and is expected to grow by 1.9% this year. This growth is being attributed to increased exports and high domestic investments. Inflation is also stable and relatively low at 2.3%, and unemployment is currently running at 4.2%, one of the lowest rates in the Eurozone.