The average Dutch house in 2024 Q2 has a price of Euro 468,000 (NOS), while the average annual Dutch salary is “only” Euro 44,500 (Manpower). Hence, an average house will cost you about 10.5x of your average annual salary. That 2024 multiplier of 10.5x was about 5x when I bought my house in 1994.
The doubling of that Dutch multiplier – or the home price-to-income ratio – is worrying me. Hence, my blog title: impoverishment (of future generations). I learned from my parents in the 1970s / 1980s that buying a house is the best investment for your future. They were right. How about our (grand) children??
The Netherlands is one of the exceptions in Europe. “Portugal, the Netherlands and Austria are among the countries where house prices grew the most in comparison to income since 2015.” (Statista). Apparently, this fact is one of reasons for a new 2024 Dutch TV show: Living in the sun for less than 100k.
I suppose my topic is (also) the reason for this European Commission topic: Is housing affordable? Some quotes from that article, while bold and italic markings below are mine:
- “The highest housing cost overburden rates in cities were observed in Greece (32.4 %), Denmark (21.9 %) and the Netherlands (15.3 %) [..]”
- “[..] with the highest shares [LO: of housing cost in total disposable income] in Greece (34.2 %), Denmark (26.3 %) and the Netherlands (23.9 %).”
- Nevertheless, “[..] the smallest [LO: arrears on mortgage, rent or utility bills] in Czechia (2.4 %), the Netherlands (2.6 %), Belgium (4.2 %) and Austria (4.8 %).”
Hence, this Statistics Netherlands article, dated 28 May 2024: Housing costs in the Netherlands higher than in most EU countries.
The average US multiplier is (very) mixed: from less than 3 to as high as 10+ and still increasing:
“In 2022, the median sale price for a single-family home in the US was 5.6 times higher than the median household income, higher than at any point on record dating back to the early 1970s. This represents a rapid increase in just a few years, as home prices have risen considerably since the start of the COVID-19 pandemic. As recently as 2019, the national price-to-income ratio was just 4.1. High price-to-income ratios are an especially worrying indicator of deteriorating homebuyer affordability.”
A quote from the 2024 Harvard article: Home Price-to-Income Ratio Reaches Record High
In my opinion, the housing market is fundamentally overpriced but what is its relevance when demand will continue to exceed supply?? Reasons vary from divorces to an influx of migrants & refugees. The reality is that not buying an overpriced house is (much) worse than buying one.
We Bought a House (2022) by Kat & Alex
duo, Facebook, lyrics, video, Wiki-Kat DeLuna, Alejandro “Alex” Garrido
[Chorus]
We bought a house
On the street with a bar
Put a swing on the porch
And a dog in the yard
We’ll paint it white
We’ll string up lights
Everything’s gonna be alright
Note: all markings (bold, italic, underlining) by LO unless in quotes or stated otherwise.
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