Rabobank’s Dutch Housing Market Quarterly: existing homes market slowly picks up after over five years of crisis

Utrecht, Netherlands, 14-5-2014 — /EuropaWire/ — After over five years of crisis, the market for existing homes is slowly but surely picking up again in the current year and this trend is set to continue next year. The number of owner-occupied houses sold will increase to between 130,000 and 140,000 this year, after a low of 110,103 in 2013. Prices are expected to edge up again (0-1% in 2014 and 1-3% in 2015). ‘In terms of both pricing trends and the number of property sales, we are out of the trough,’ comments housing market economist Pieter van Dalen of Rabobank. Rabobank’s Dutch Housing Market Quarterly is published today.

‘Several factors are prompting consumers in the housing market to decide that now is a good time to buy a home. The main factors are the strongly increased affordability of housing and the improved housing market sentiment. In our view, those factors outweigh countervailing forces such as the problem presented by residual debt and the continued growth of unemployment,’ according to Van Dalen. While house prices decreased by 1.5% versus the first quarter of 2013, they have risen by 1.3% in the past nine months. The number of transfers of ownership likewise increased sharply.

Limited rate of increase in number of sales
In terms of the number of sales, the first quarter of 2014 was the best first quarter since 2008. Van Dalen: ‘We expect that the number of sales will continue to rise, but in view of the lower lending capacity and the relatively large group of households with potential residual debt the rate of this increase will be limited during the current year. Next year will at last see a clear increase in real disposable income per household. In addition, the price stabilisation will boost confidence in the housing market. A positive price trend will also limit the residual debt problem to some extent next year, and circulation in the housing market will accordingly gradually gather more momentum. We therefore expect slightly more property sales for 2015 than in 2014.’

The new housing sector will in due course also benefit from these favourable housing market conditions. In view of the very low number of building permits in 2013, the Rabobank economist is expecting new residential construction to bottom out this year. Van Dalen: ‘We are already seeing an increase in the number of pre-sales of new housing, and accordingly expect a recovery of new housing development in 2015.’ Rabobank is expecting new residential construction volumes to contract by 2% in 2014 and to grow by 8% in 2015.

Recovery not yet manifest across all fronts
The recovery of the Dutch economy and housing market is not yet manifest across all fronts. Just as the construction sector is slower with recovery, it will also take longer before the problems with housing with potential residual debt levels have been resolved. Van Dalen: ‘Even if prices rise it will take several years before existing homeowners with residual debt have recovered. Homeowners making repayments on their mortgages will be quicker to recover than those who still have full interest-only mortgages.’

You can view and download the Dutch Housing Market Quarterly on www.rabobank.com/economics

For further information
Organisation: Rabobank Nederland
Koos Verheul
+31 30 21 66918
k.verheul1@rn.rabobank.nl