The effect of higher mortgage rates will not be reflected in house prices and the number of transactions until the third quarter of this year at the earliest. That is what the Land Registry says in a quarterly report on Wednesday. Kadaster expects that the housing market will be less active in the near future, resulting in less sharp price increases.
Mortgage interest rates have risen sharply this year. Where the interest rate for short- and long-term mortgages was between 1 and 1.5 percent in January, it was about 3.8 to 4.5 percent in July.
This significantly higher interest rate will also have consequences for the housing market. The Land Registry expects the interest rate hike to push the brake pedal of the housing market further. The number of transactions will decrease, leading to smaller price increases. The Kadaster thinks this effect will only be visible “at the earliest” in the third quarter.
Higher mortgage rates are not the only thing slowing down the housing market. The Land Registry also believes that high inflation and the traditional economic law of supply and demand will play a role. “At a certain point, house prices are so high that fewer and fewer people are able to buy a house. As a result, the number of transactions decreases, after which the price increase also levels off,” according to the Land Registry.
House prices have been rising less rapidly than before for a number of months, although a house still cost an average of 429,000 euros in the second quarter. That is 17 percent more than in the same period last year. The number of transactions between April and June was at the lowest level of any other second quarter since 2015.
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