The Dutch housing market has moved past peak overheating, with ABN AMRO Group Economics’ latest Housing Market Monitor showing ever-increasing signals of cooling down. The bank’s economists point to less rapidly rising house prices and the persistent fall in the number of homes actually purchased – a confluence of trends corroborating their forecasts that house purchases will end this year 5% down. At the same time, Group Economics assumes that house prices will advance less rapidly than they have done recently. That said, the projected rise by 6% still outpaces the historic average by one percentage point.
Philip Bokeloh, one of ABN AMRO’s economists, commented: “A key sign of cooling is consumers’ declining confidence in the housing market, as they feel that now is no longer a good time to buy. A shrinking supply has made it increasingly difficult to find a suitable and affordable home, as house prices keep rising but their disposable incomes have generally not kept pace. This uptick in house prices looks set to continue as interest rates remain low and there are too few new builds.”
Incomes to climb less rapidly
2020 projections
Factoring in expected economic trends and current housing market conditions, Group Economics reckons that house price increases will level off further in 2020. Its economists predict that prices will rise by 4% next year, while house sales look set to contract further, also because many consumers who had put off buying during the financial crisis have now moved, reducing the number of catch-up purchases. Group Economics is currently assuming that the number of transactions will fall by another 5%.
