Dutch housing market no longer a treat as economy teeters toward a recession

By Maud van Gaal  |   2008-11-25  |     NEWSPAPER EDITION

INGE Fransen cut the asking price for her house in the Netherlands by 11 percent last month, as one of the final holdout markets in Europe's housing boom capitulates.

"I'm concerned the whole market will come to a halt," said Fransen, 45, who now wants 339,000 euros (US$432,670) for her five-bedroom home in Zwanenburg, a town built on land reclaimed from the water seven miles from Amsterdam. "Everyone will stay put, not buying or selling."

Eighteen months after real estate markets in Spain and Ireland began to sputter, the Netherlands is following suit. Prices of properties including 17th-century Amsterdam canal-side townhouses dropped in the third quarter for the first time since 1980 after doubling in the last decade.

The boom has left the Dutch saddled with the highest level of mortgage debt in the euro region just as the economy slides into recession. As recently as the second quarter, the Netherlands was the only euro-area country among 11 surveyed by the Global Property Guide with rising property prices.

"In September, everyone still said the Dutch housing market would never fall," Klaske Woolthuis, 32, a communications adviser who has been looking for a house outside Amsterdam for 18 months, said in a Bloomberg News interview. "Now you see this changing. It's becoming more of a buyer's market."

Average prices slipped 0.3 percent in the third quarter from the previous three months, according to Nieuwegein-based NVM, the Dutch Realtors Association. In the Amsterdam region, where narrow houses loom over canals winding through the city center, prices fell 4 percent to an average 265,000 euros.

Prices may drop by as much as 10 percent in 2009 should the credit crisis worsen and buyers hold back, according to Peter Boelhouwer, a housing professor at Delft University.