Rabobank: Recovery on the Dutch Housing Market to continue in 2015

The number of homes sold is rising, and house prices are also expected to show a modest rise. For this year they expect that the number of homes sold will reach 145,000 and the average house price will rise by 1% compared to the 2013 average. The Dutch housing market is recovering against a backdrop of modest but improving economic growth. The rise in disposable household income and the recovery on the labour market are having a beneficial effect on the housing market. Should this happen nevertheless, the specific Dutch situation means that we are unlikely to see a large increase in the number of households running into difficulties with their repayments.

The Dutch housing market is recovering against a backdrop of modest but improving economic growth. For 2014 the Rabobank economists expect GDP to grow by ¾% compared to 2013, largely thanks to exports and investments. In 2015 household consumer spending will also make a positive contribution and the Rabobank researchers anticipate a growth in GDP of 1½%. Thanks to the growth in employment, unemployment is falling. The rise in disposable household income and the recovery on the labour market are having a beneficial effect on the housing market.

'We believe that this economic recovery, higher levels of consumer confidence, low mortgage interest rates and a substantial number of new-build homes sold are having a greater effect on the housing market than negative factors such as ending or scaling back the incentive measures, the negative equity problem and credit-limiting measures', says housing market economist Pieter van Dalen of the Rabobank.

During the third quarter the number of homes continued to grow, albeit more slowly than in the preceding quarters. However, the house price index did rise faster than in the preceding quarters. Van Dalen: 'With a rise of 0.9% compared to the last quarter, and 1.8% compared to last year, this has been the strongest price rise since the crisis broke out in 2008. The number of sales contracts recorded by the Dutch Association of Real Estate Brokers (NVM) points to a further slight rise in the number of transactions in the fourth quarter of this year.'

Mortgage interest rates at a record low

'Mortgage interest rates have been falling sharply since mid-2011 to historically low levels, and we do not expect them to rise significantly this year and next year. Should this happen nevertheless, the specific Dutch situation means that we are unlikely to see a large increase in the number of households running into difficulties with their repayments. This is partly due to the tax relief on mortgage interest payments, the habit of homeowners to fix their interest rates for a long period, and the use of a higher nominal interest rate for short fixed-rate periods.'

Dutch Housing Market Quarterly can be downloaded on www.rabobank.com/economie

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