Property investors who bought in the Dutch market have been hit with prices that have dropped for five straight years – and the decrease is accelerating, according to figures.
Average house prices fell by 11.4% in real terms last year to make it the biggest drop in values for five years.
The figure comes from the Dutch Association of Real Estate Agents (NVM) which adds that the future is bleak for investors and warns that property prices will inevitably fall again in 2013.
A spokesman said: “The country’s weak economy is not helping and we are seeing mortgage approvals fall and high interest rates which look like making any recovery in the near future impossible.”
Permits for new builds are also at their lowest since 1953 with just 55,804 applications being made.
According to government figures from Statistics Netherlands (CBS) the price of homes fell slightly less at 9.1%, when adjusted for inflation, in the year to November.
They say the biggest house price falls were felt in Amsterdam (-11.2%) and Apeldoorn (-9.7%).
Whichever figure an investor chooses, the property market in Holland is in serious trouble.
The NVM say the average house price in Holland is now £178,000 and the number of sales is also dropping too – down 7.2% between January and November to 99,897.
In comparison, between 2005 and 2008 the average number of property transactions was 200,300.
It’s a far cry from the property boom between 1992 and 2001, when property prices surged by 80% and then continued to increase each year afterwards by an average of 11%.
The boom ended when the economy officially went into recession in 2011 after 26 years of growth.
Europe’s worst mortgage debt
One legacy from that period, when successive governments pushed for home-ownership and introduced a generous tax regime, is that mortgage debt is now more than 100% of GDP, one of the highest levels in the Eurozone.
Property investors have also been warned off the Netherlands by investment firm Colordarcy, which says the country is the ‘worst performing’ real estate market in 2012.
Holland is now on a list, which also includes Eurozone basket cases Greece and Portugal, for countries where property investors will not see gains for the next 12 months.
A spokesman said: “Dutch property owners have some of Europe’s highest mortgage debts, so that coupled with the falling value of property and unemployment running at 15% is a real concern.
“We believe that the Netherlands is going to be the worst property market in 2013 and we cannot find a single reason why an investor would have gained anything in 2012 and they are unlikely to do so this year.”