‘Residential market remains overheated this year’ | Money

As it stands now, according to their estimates, owner-occupied homes will become on average 17.3% more expensive this year, which is much stronger than the forecast of a 12% price increase that was announced in December. Next year, prices would then go up by another 5.5%, where a plus of more than 3% had previously been assumed. Because there are almost no houses left for sale, the number of transactions is expected to decrease to approximately 191,000 this year, before increasing again in 2023 to approximately 198,000 homes sold.

Economist Stefan Groot of RaboResearch explains that the adjustments should be seen as a reaction to the stronger than expected price increases in the past period. In January owner-occupied homes were more than 21% more expensive than in the same month last year. “House prices in our country have not risen so much since 1977,” emphasizes Groot.

Mortgage interest

He does, however, expect a less exuberant increase in house prices in the course of the year. “This is because the economy is expected to grow less rapidly than in recent years. Capital market interest rates have also stopped falling for some time, which has consequences for mortgage rates.” The fact that mortgage interest rates have been very low for a long time has often been mentioned in recent years as an important cause of the increase in house prices. Now that interest rates are rising again, this is expected to have a depressing effect.

According to the economist, the war in Ukraine will probably not immediately cause a turnaround in the housing market. “But this will ensure that house prices increase less rapidly due to the impact of the war on the Dutch economy,” he says. For example, because the energy bill and prices at the pump have risen sharply, people have less money left over for monthly housing costs. The risk of a recession would also have increased. “If the economy does indeed end up in tougher weather, house prices will probably rise less quickly than we currently anticipate,” says Groot.

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