Softer price rises in heated housing market

Our bank’s economists assume that house prices will add six per cent this year and another four per cent in 2020. Meanwhile, house sales are set to come down by five per cent in 2019 and by another five per cent in 2020.

Philip Bokeloh, senior economist, comments on the housing market: “Until recently, we assumed that house prices in the Netherlands would advance by seven per cent in 2019. We have now reduced this to six per cent, as our confidence in the housing market has decreased in the wake of growing uncertainty over economic growth, among other factors. That said, we do think that house prices will continue to go up both this year and next. The net increase should edge ahead of the historic average, as mortgage rates continue to be low and housing supply in the Netherlands looks set to remain tight going forward.”

Waiting to move

An early sign of slowing prices was the fall in the number of houses actually sold, a trend that became visible as early as 2018. Fewer houses were sold, as higher prices have made homes less affordable and buying sentiment has softened. Meanwhile, most people who had put off buying at the time of the financial crisis have now made their move, while there is currently also a shortage of homes actually for sale. This is mainly caused by people looking to trade up, who tend to buy a new home before slapping a ‘For Sale’ sign on their current one. Over time, Group Economics reckons, this group will start to put their homes on the market before buying a new one, in which case more houses should be for sale. All that said, our economists are assuming further declines in the number of house sales until 2021.

For the full analysis (in Dutch only), go to ABN AMRO Insights.