The housing market has been crazy in recent years. Overbidding was pretty much the norm and prices went up for years. Buyers were clamoring for a viewing. But it seems that the housing market is cooling down further, after the average house price already descended.
In May, there were 32 percent fewer requests from potential buyers for information or for a viewing compared to the same period last year, data from housing site Funda shows.
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Fewer viewers
Sellers now receive an average of 7.8 viewers, which is considerably less than the 13.1 of the same period last year, adds director Gijs van Wijgerden of Makelaarsland, the largest digital broker in our country.
It is already the fifth month in a row that the number of viewings has fallen, he says. “Fewer viewings is an indicator that consumers have become a little more cautious. The madness is starting to turn.”
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Fewer bids, less overbid
Fewer viewers also means fewer bidders. In recent months, the number of bids per home has fallen from 6 to an average of 4.6, data from Makelaarsland shows.
Those who bid are less willing to bid above the asking price. In June last year, nearly nine in ten (88.3 percent) wanted to outbid. That is now 70.9 percent, says Van Wijgerden.
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If potential home buyers offer more than the asking price, then they will now be outbid ‘considerably less than before’, he thinks. But he doesn’t know exactly how much.
“Not every buyer is aware that there is less competition, so they think they still have to outbid,” said Meryl van de Sandt, spokesperson for housing website Funda.
Sellers are in a hurry
All in all, buyers are more reluctant, but sellers seem to be in more of a hurry to put up a ‘for sale’ sign. In May there were about 40 percent more new registrations for the sale of existing homes than a year earlier, says Van de Sandt.
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People who will have their new-build home completed at the end of this year are already putting their house up for sale, while they would normally only do so in September, adds Van Wijgerden.
Higher interest
According to Van Wijgerden, there are various reasons for the cooling of the housing market. The war in Ukraine, the sharp rise in inflation and rising energy costs, for example, are creating more uncertainty among potential buyers, he says.
“Furthermore, the mortgage interest rate has a major influence, because a higher interest rate increases the monthly costs and buyers can sometimes borrow less.”
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‘Exceptional increase’
“It is really exceptional, the interest rate has risen almost 2.5 percent since October. Such an increase has happened before, but in a period of 2 to 3 years,” says Martin Hagedoorn, product manager at De Hypotheekshop. He does add that historically, interest rates are not even that high right now.
The Dutch Central Bank (DNB) thinks that house prices will continue to rise moderately in 2023 and 2024, by 3.7 percent and 2.5 percent. It is precisely because we are coming from such a low interest rate that the situation on the housing market is manageable, Hagedoorn also thinks.
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He finds it difficult to say where the current interest rate rise will end. At the beginning of the year, he still thought that interest rates might rise slightly, but he has now stopped. But somewhere around 4 to 4.5 percent, the interest rate rise will stop anyway, he thinks.
‘Market now healthier’
Hagedoorn sees that home buyers are increasingly opting for a fixed-interest period of ten years. Until recently, the interest rates for different maturities were closer together, but the difference between, for example, ten and twenty-year fixed-rate interest is now increasing again, he says.
It is also important that banks look at your income to find out how much you can borrow and with a fixed-interest period of ten years you can usually borrow the most, he says.
Are sellers having a harder time now? “Ultimately you only need one buyer, there is no pressure on the price yet, because there is still a shortage of homes and the demand remains up to now, says Van Wijgerden. “All in all, the market has become a bit healthier now. “
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