AMSTERDAM: House prices in the Netherlands jumped an unprecedented 20% on a yearly basis in the second quarter, as low interest rates and a shortage of houses continued to fuel an already overheated property market, the Dutch association of realtors (NVM) said on Thursday.

The average selling price for a house in the Netherlands surged to 410,000 euros ($485,000) in the April-June period, the NVM said, passing the 400,000 euro mark for the first time on record.

“The situation is crazy”, NVM director Onno Hoes said in a statement, as he called for government intervention to stabilise the market.

“Supply is drying up, and buyers will do just about anything to get the property they want.”

House prices in the Netherlands have risen for the past five years, as low interest rates, favourable tax policies for home owners and a strong economy drive up demand.

Although the COVID-19 pandemic caused the deepest contraction of the Dutch economy on record last year, house prices continued to rise as lockdowns boosted the appeal of rural areas and the number of available houses dropped fast.

The overheated housing market is set to be one of the main challenges for the next Dutch government, which has still to be formed almost four months after the last elections.

Dutch central bank president Klaas Knot last week repeated a call for drastic reforms of the housing market, by further limiting the size of loans and scaling back tax deductions for mortgage interest payments, while rapidly increasing the construction of new homes.

The main conservative parties in the Netherlands, however, are traditionally reluctant to touch tax favours for home owners, while environmental rules limit the scope for building in the densely populated country of 17.5 million.

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