The Netherlands continues to see house prices surging

Today gives us the opportunity to look at several issues. Sadly the initial opening backdrop is this.

Dutch prime minister Mark Rutte announced yesterday that the Netherlands is going into “partial lockdown”, due to the sharp rising numbers of coronavirus infections. From Tuesday evening, all bars and restaurants will be closed for at least one month. Buying alcohol after 10PM is forbidden. Hotels remain open, as well as bars and restaurants in the airport, after the security check. ( EU Observer).

So we see that another squeeze is being put on the economy To put this another way the Statistics Netherlands report below from Monday now looks rather out of date.

The economic situation according to the CBS Business Cycle Tracer has become less unfavourable in October. However, the economy is still firmly in the recession stage. Statistics Netherlands (CBS) reports that, as of mid-October, 10 out of the 13 indicators in the Business Cycle Tracer perform below their long-term trend. Measures against the spread of coronavirus have had a major impact on many indicators of the Tracer.

If we look at the situation we see that it was a pretty stellar effort to have a reading of 0.56 in April but the number soon plunged to its nadir so far of -1.95 and the latest reading is -1.21.

The picture for trade, investment and manufacturing is as you might expect.

In August 2020, the total volume of goods exports shrank by 2.3 percent year-on-year. Exports of petroleum products, transport equipment and metal products decreased in particular. Exports of machinery and appliances declined as well.

The volume of investments in tangible fixed assets was 4.5 percent down in July 2020 relative to the same month last year. This contraction is smaller than in the previous three months and mainly due to lower investments in buildings and machinery.

In August 2020, the average daily output generated by the Dutch manufacturing industry was 4.0 percent down on August 2019. The year-on-year decrease is smaller than in the previous four months.

Along the way we see how this indicator was positive in April as some of it is lagged by around 3 months. That is also highlighted by the consumer numbers.

In July 2020 consumers spent 6.2 percent less than in July 2019. The decline is smaller than in the previous four months. Consumers again spent less on services but more on goods.


Yesterday’s official release told us that the unemployment data in the Netherlands are as useless as we have seen elsewhere.

In September 2020, there were 413 thousand unemployed, equivalent to 4.4 percent of the labour force. Unemployment declined compared to August and the increase seen in recent months has levelled off. In the period July through September, the number of unemployed increased by a monthly average of 3 thousand. From June to August, unemployment still rose by 32 thousand on average per month, with the unemployment rate going up to 4.6 percent.

There is a clear case for these numbers to be suspended or better I think published with a star combined with an explanation of the problem.

We do learn a little more from the hours worked data although as you can see they are a few months behind the times.

Due to government support measures, job losses were still relatively limited in Q2 at -2.7 percent, but the number of hours worked by employees and self-employed fell significantly and ended at a total of 3.2 billion hours in Q2 2020. Adjusted for seasonal effects, this is 5.7 percent lower than one quarter previously.


This was better than the Euro area average in the second quarter.

According to the second estimate conducted by CBS, gross domestic product (GDP) contracted by 8.5 percent in Q2 2020 relative to the previous quarter. The decline was mainly due to falling household consumption, while investments and the trade balance also fell significantly. Relative to one year previously, GDP contracted by 9.4 percent.

House Prices

Here we have something rather revealing and ti give you a clue it will be top of the list of any morning meeting at either the Dutch central bank or the ECB.

In August 2020, prices of owner-occupied dwellings (excluding new constructions) were on average 8.2 percent higher than in the same month last year. This is the highest price increase in over one and a half years.

Yes house prices are surging in a really rather bizarre sign of the times.

House prices peaked in August 2008 and subsequently started to decline, reaching a low in June 2013. The trend has been upward since then. In May 2018, the price index of owner-occupied dwellings exceeded the record level of August 2008 for the first time. The index reached a new record high in August 2020; compared to the low in June 2013, house prices were up by 51 percent on average.

This gives us a new take on the “Whatever it takes” speech by ECB President Mario Draghi in July 2012. Because if we allow for the leads and lags in the process it looks as though it lit the blue touchpaper for Dutch house prices. It puts Dutch house prices on the same timetable as the UK where the Bank of England acted in the summer of 2012 and the house price response took around a year.

The accompanying chart will also warm the cockles of any central banking chart as the house price index of 107.2 in September 2016 ( 2015 = 100) becomes 143.4 this August. Actually in the data there is something which comes as quite a surprise to me.

According to The Netherlands’ Cadastre, the total number of transactions recorded over the month of August stood at 19,034. This is almost 3 percent lower than in August 2019. Over the first eight months of this year, a total of 148,107 dwellings were sold. This represents an increase of over 5 percent relative to the same period in 2019.

More transactions in 2020 than 2019? I know such numbers are lagged but even so that should not be true surely?


One might reasonably think that with all that house price inflation that inflation full stop might be on the march.

In September, HICP-based prices of goods and services in the Netherlands were 1.0 percent up year-on-year, versus 0.3 percent in August.

the answer is no because the subject of house price rises is ignored on the grounds that they are really Wealth Effects rather than price rises.That, of course throws first-time buyers to the Wolves. In fact if I may use the numbers from Calcasa first-time buyers can be presented as being better off.

On average, 13.6% of net household income was required to service housing costs in the second quarter of 2020, compared to mid-2008 when housing costs represented 27.0% of net income.

Such numbers have the devil in the detail as averages hide the fact that first-time buyers are being really squeezed.


The Netherlands is an economic battleground of our times.If we start with the real economy we see that there was a Covid-19 driven lurch downwards followed by hints of recovery. Sadly  the recovery now looks set to be neutered by responses to the apparent second Covid wave. The last quarter of 2020 could see another contraction.

Yet if we switch to the asset prices side the central bank has been blowing as much hot air into them it can. Bond prices have surged with bond yields negative all the way along the spectrum ( even the thirty-year is -0.21%), So we start with questions for the pensions and longer-term savings industry. Then we arrive at house prices which are apparently surging. You almost could not make that up at this time! The inflationary impact of this is hidden by keeping the issue out of the official inflation measure or if really forced using rents for people who do not pay rent. Meanwhile their other calculations include gains from wealth effects boosting the economy.

If we look forwards all I can see is yet another easing move by the ECB with more QE this time maybe accompanied by another interest-rate cut. I fail to see how this will make things any better.


18 thoughts on “The Netherlands continues to see house prices surging

    • stocked up eh?

      seems our MPs will bring their own now…..

      “COVID restrictions prompt ban on sale of alcohol in UK parliament”

      enjoy the single malt whilst you can , I suspect a UK wide ban will soon be in the offing….


  1. Hello Shaun,

    the disconnect is that you’re thinking rationally . These are not rational times .

    Our leaders have gone through the hills and valleys of madness and have arrived into those sunny uplands of insanity. It’s so simple now , you see?

    Well beyond white cat territory.


    • Hi Forbin

      The Cheshire Cat was on the case here.

      “Would you tell me, please, which way I ought to go from here?”

      “That depends a good deal on where you want to get to,” said the Cat.

      “I don’t much care where—” said Alice.

      “Then it doesn’t matter which way you go,” said the Cat.

      “—so long as I get somewhere,” Alice added as an explanation.

      “Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

  2. I was thinking about a move to the Netherlands a while ago but watching the way things have gone there recently coupled with reading articles like this I am going to wait and see.

    • I often work there, and i’m overjoyed to get back to England.

      It’s an overly expensive, police state with a communist level of bureaucracy. The people are pleasant enough until they get into a position of vague authority.

      If leaving England only place i could suggest is somewhere sunny or NZ if they ever let people in again.

  3. I recently came across a Positive Money Europe opinion piece that condemned the EU decision to keep OOHPI out of the HICP:
    Positive Money Europe is a Brussels-based organization trying to reform the ECB. I am now on their mailing list. Unfortunately, some of their causes are more questionable, like helicopter money.
    What you describe in your blog is not The Netherlands’ first brush with out-of-control house prices. Andrew Lydon, a Birmingham economist who is a member of our RPI CPI User Group, wrote to an official at the Dutch National Bank in 2012, as follows:
    “I cannot help thinking that had the Netherlands included owner-occupied housing in its Consumer Prices Index before the Maastricht convergence criteria became an issue, the Netherlands would have had problems with meeting the criteria regarding CPI inflation, and so would have not been able to maintain convergence on Germany in the matter of interest rates and exchange rate.
    “I know that by 1998, the German Bundesbank was very aware of this problem with the CPIs. Did DNB ever press to have owner-occupied housing brought in to the Dutch CPI?”
    The response he received confirmed that Dutch house prices accelerated substantially in the late 1990s, but neither confirmed nor denied that the DNB ever asked to have OOH included in the Dutch consumer price measures.
    It would be useful if Eurostat could get the original euro members to push back their OOHPI series to the late 1990s, and see if Andrew was right in believing that based on HICPs including an OOHPI component, the Netherlands would not have qualified to be one of the founding euro members based on the price stability criterion.
    Change of topic: I have visited Houston, Texas several times and reggae music seemed to be almost non-existent there. It is quite remarkable that this was the home and birthplace of Johnny Nash.

  4. Could it be the people with money are being rational. Savings return nothing, taxes will be sure to rise and cash savings could be hit. All this printing of money will cause inflation eventually so is it actually better to put cash into property rather than saving or waiting for the market to crash as the perceived risk to savings is higher than the short to mid term loss in the house price? If you are going to be forced to stay at home you might as well have a nice overpriced one and even if they do crash you might not be able to buy the nice one you see available right now.

    The last 6 months have been very unfair. Some people have lost their industries entirely whilst others have had a huge reduction in their cost in getting to work and been unable to use it up on holidays so have extra savings they can use on buying a new property.

    None of this helps first time buyers of course.

    • hi bootsy,

      ” extra savings they can use on buying a new property. ”

      which is exactly the plan , in fact its the only plan …….


    • Cant but help think landlords and 2nd homeowners are going to get absolutely hammered in the next budget.

      MIRAS for all landlords will be the first hammer blow to them, not just higher rate payers.

  5. Hi Shaun
    It seems that we have a choice of watching
    our savings erode with no interest, or worse
    plus true inflation.
    The only alternatives seem to be either the
    potential bubbles of residential property or
    shares in the increasing large ponzi
    companies, what a choice!
    I need a drink.

    • Hi JRH

      I think one of my neighbour’s is thinking along the same lines as when I passed him earlier he had was loading up with plenty of bottles of wine. Apparently the supermarket concerned was offering 10% off,then you get 25% off if you buy more than 6 and they had also sent him a 30% off voucher. Happy Days! Or rather Hic! For him and his misses….

      As to investments it is a problem and why people are looking at the coins and precious metals.

      • There are a load of props to encourage homeownership in the Netherlands.
        100% mortgages? Check. State guarantees? Check. Interest only mortgages? Check. Mortgage interest relief? Check. In addition if you have any modest savings (more than €30k) then you’ll end up paying a wealth tax on the zero interest rate you’ll receive from your savings account. All together it creates a housing market that’s likely to be quite prone to booms and busts.

        Here are ABN Amro’s mortgage rates.

        You can get a 30 year fix with a state guarantee (as long as the house costs less than €310k) at 1.84%. 30 year fix with no deposit at 2.39%. Thank you Mr Draghi.

        In addition to this the Dutch have in recent years been going heavily into buy to let, so there’s a fair bit of speculation going on. All together it’s not surprising that house prices have soared.

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