Rabobank: Recovery in the housing market to continue this and next year
The recovery in the Dutch housing market is continuing. The number of existing homes sold in 2014 is expected to rise to between 135 and 145 thousand. This is the highest figure since 2008. House prices are also rising cautiously, and are expected to be between half and one and a half percent higher in 2014 compared to 2013. Home sales are expected to reach between 140 and 160 thousand in 2015, while prices are expected to rise on average between one and three percent compared to 2014. This is the message from the Rabobank economists in their Quarterly Report on the Housing Market published today.
"Households are clearly seeing more favourable conditions for activity in the housing market now than in recent years", says housing economist Pieter van Dalen of Rabobank. He added that this also applies to households which had deferred their plans to move during the crisis. Van Dalen: "Important factors include falling mortgage interest rates and increased confidence in the housing market. These positive factors are expected to have a stronger effect than the problem of negative equity, which depresses the level of home sales."
Rabobank expects the economy to continue to improve in 2015. "We therefore expect to see the dynamics in the housing market increase further. Homes will continue to be affordable, because house prices and mortgage rates are not expected to rise rapidly. Real disposable household income will also rise further, as will employment. And, given the modest price increases since mid-2013, we expect confidence in the Dutch housing market also to continue to pick up", said the Rabobank economist.
Mortgage interest rates at a historical low
”Mortgage rates have fallen sharply since mid-2011; rates fixed for up to 10 years are actually at historical lows, and we do not expect any sharp increase this year." Van Dalen explains that lower interest rates are not only beneficial for first-time buyers and subsequent buyers: "Home owners whose fixed-rate period is about to expire will also benefit from the current level of mortgage rates. And obviously, this development will also support the rising volume of home sales and the modest price increases we expect to see in 2014 and 2015."
Private consumption to rise slightly in 2015; unemployment will decline somewhat
The developments in the Dutch housing market are taking place in the context of a cautious economic recovery. Van Dalen: "Besides good prospects for exports, an increasing number of domestic indicators are pointing in a positive direction. However households will continue to be cautious as regards ramping up consumption, partly due to the desire to reduce debt. Since real disposable household income will rise again next year, we do expect to see a slight increase in personal consumption in 2015. Unemployment will also decline to some extent next year. The development of the economy is thus providing the right conditions for a further recovery in the housing market."
The Quarterly Report on the Housing Market is available for download at: