Dutch Housing Market Quarterly
26-11-2009 | Economic news
The housing market in the Netherlands appears to be stabilising. It seems the worst of the decline in transaction numbers and house prices is behind us. The median house price as recorded by the NVM (Netherlands Association of Real Estate Brokers) has been rising in the last two quarters, albeit influenced by compositional effects.
Still, we expect that the other price series, which are published with a lag, will also indicate evidence of a stabilisation in house prices. The current situation on the Dutch housing market is therefore not comparable to the late 1970s and early 1980s, when house prices fell from their peak by some 30%. At that time a structural adjustment had taken place on the housing market, caused by fundamental changes to mortgage market, which meant that buyers could no longer borrow as much as was previously the case.
Current economic circumstances
Owing to current economic circumstances, including rising unemployment, the number of forced sales will increase somewhat. Nonetheless, the percentage of Dutch households struggling with repayment problems is the lowest in Europe (less than 0.5%), and this percentage is barely rising. Furthermore, in the bulk of cases, people manage to solve their problems within a matter of months, thus avoiding having to sell their house.
In 2009, the affordability of buying a house in the Netherlands showed a marked improvement. The underlying changes in house prices, mortgage interest rates and household income are not permanent in nature, however, which means that the improvement will be merely temporary.
For 2010 we envisage a stabilisation of the current level, after which affordability can be expected to deteriorate again, in the wake of expected higher house prices and rising mortgage rates.
Despite the lower mortgage output, total mortgage debt continues to climb. This is chiefly due to price rises from the past. Current buyers often have to take out a larger mortgage than their predecessors. Furthermore, the number of houses in the non-rental sector is still rising.
For 2009 we envisage a price drop of 3½%, followed by a further decline of 1% in 2010. Next year’s drop will be chiefly due to lower prices at the start of 2010 compared to 2009.
