Utrecht, Netherlands, 6-11-2015 — /EuropaWire/ — The Dutch housing market will grow steadily this year and next. Some 182,000 houses are expected to be sold this year, a rise of 19% compared to 2014. In 2016 we expect between 175,000 and 195,000 houses to change ownership. House prices will rise too, by 2¾% in 2015 and by 2¾ to 4¾% in 2016. This is good news for households in negative equity. Some 150,000 households alone will move out of negative equity in 2015, meaning that the value of their house will once again be higher than their mortgage borrowing. This trend is expected to continue into 2016 for a further 170,000 households. These are the views of the economists at Rabobank in their Dutch Housing Market Quarterly published today.
The number of houses sold will reach pre-crisis levels next year. Housing market economist Pieter van Dalen at Rabobank: ‘We do not expect the catch-up growth in sales we experienced in 2014 and the robust growth this year to continue in 2016. But we will certainly see the high levels of house sales again next year. This is largely due to the combined effects of ongoing and steady economic growth, greater purchasing power among households, rising employment, solid confidence in the housing market and low mortgage rates.’
Van Dalen anticipates a reduction in supply on the housing market as demand grows. ‘The number of houses from which buyers can choose, will fall. As a result, house prices are expected to rise slightly faster in 2016 than this year, which will be very helpful for those households in negative equity. This, together with regular repayments and capital accrual in savings mortgages, will enable a significant number of households to move out of negative equity. I should sound a note of caution, though, as the negative equity problem is still substantial: the group with a potential residual debt is still almost twice as large as before the crisis.’
Mortgage debt rising only slightly, mortgage rates low
Total mortgage debt will rise very gradually this year. The rise in the number of new mortgage approvals as the housing market picks up will be offset by a high level of extra repayments. Mortgage rates have been hitting new record lows virtually every quarter until now. Van Dalen: ‘For next year we expect interest rates in Europe to rise only very slightly, so that mortgage rates can remain low.’
Read the Dutch Housing Market Quarterly here: www.rabobank.com/economie