Rabobank: Housing market growing, house prices continuing to rise in 2016

The Dutch owner-occupied housing market will grow this year thanks to favourable market conditions. As regards the number of homes sold, this growth will level off slightly to between 180,000 and 200,000 sales. But house prices are in fact expected to rise faster than in 2015, by between 2 3/4 and 4 3/4%. For the first time since 2008, housing costs in relation to income will therefore be slightly more expensive. These are the views of economists at Rabobank in their Dutch Housing Market Quality published today.

Rising purchasing power, higher employment, low interest rates
Paul de Vries, housing market economist at Rabobank: ‘Purchasing power and employment are rising, and that is good for domestic expenditure and the housing market. Mortgage rates are also likely to remain at their historically low levels during 2016. We do therefore expect to see a further rise in house prices. And although there will of course be regional differences, we are seeing the number of sales picking up in virtually all parts of the country.’

Household borrowing capacity will rise slightly in 2016
Household borrowing capacity will rise slightly in 2016. De Vries: ‘This borrowing capacity is determined by the Nibud standards, the level of household income and mortgage rates. The maximum amount that house buyers will be able to borrow will be slightly higher on average in 2016 as the second income will be taken more into account than before. We also anticipate that incomes will rise and interest rates will remain low. All this means that households will be able to borrow almost 1% more to buy a house in 2016.’

Housing costs a little more expensive for those buying a house this year
Although the affordability of Dutch owner-occupied houses can be considered good, it is declining slightly. Since house prices are rising faster than household incomes, the monthly outgoings for buyers will be a bit more expensive this year than last year. De Vries: ‘Even so, on average buyers will still be paying a much smaller percentage of their income on mortgage payments in 2016 than the long-term average. Thanks to this good affordability, consumer confidence in the housing market remains high. And that in turn is favourable for price trends and the number of houses changing ownership.’

Read the Dutch Housing Market Quarterly here: www.rabobank.com/economics


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