The corona crisis is causing a lot of uncertainty, also on the housing market. What will the prices do in the coming months and is it a good idea to buy or sell a house now, or should you just wait a bit longer? "Mortgage rates have been falling slowly for decades, no one expects high interest rates again."
Those who see the NVM figures from last Thursday would think that nothing can harm the housing market. House prices in our country rose again in the second quarter compared to last year. For the first time, more than half of the homes were sold above the asking price.
According to the NVM, the corona crisis has little or no impact on the housing market. There were fewer buyers on the market. "We have noticed that consumers have confidence in the resilience of the Dutch economy; they embrace their own home and think not in the short, but long term," said NVM chairman Onno Hoes.
But will it stay that way? Is there really so much demand for housing that even a pandemic cannot lower house prices? Can start-ups ever make their move? And what will happen to the new construction sector now that the corona crisis comes on top of the nitrogen crisis?
We asked TU Delft professor of Housing Market Peter Boelhouwer and Taco van Hoek, director of the Economic Institute for Construction (EIB), what we can expect from the housing market in the coming months.
First that burning question: what will happen to house prices in the coming months?
"That is difficult to say, because we do not know exactly what the corona crisis has in store for us," says Boelhouwer. He sketches three scenarios.
The first: there will be no second wave and there will be a vaccine in the course of next year. "Then we will have somewhat higher unemployment in the second half of this year and this will have a temporary effect on demand. As a result, house prices will rise somewhat more slowly. But we will return to normal during the course of next year. "
In the second scenario, we are faced with a second lockdown. The housing market will suffer from this, Boelhouwer thinks. "There will be a drop in demand, which will cause prices to fall. Confidence will also drop, so that the recession will continue and the economy will not immediately recover next year. That will take a little longer, but then the delayed demand will come back and house prices will rocket. . "
Finally, the third scenario: there will be no vaccine and the current situation will last for another five years. "Then the housing market will be hit for a long time," said the professor.
The housing market in figures
- According to Statistics Netherlands, the Netherlands has over 7.8 million homes.
- Of these, approximately 4.5 million are owner-occupied homes.
- The other 3.3 million homes are rental homes, of which 2.3 million are owned by a housing association.
- The average WOZ value on 1 January 2019 was at a record high: 248,000 euros per home.
- According to the NVM, the average sales price of the past quarter was 335,000 euros.
- The average price of a new-build home last quarter was 401,000 euros.
And the mortgage interest rate, will it remain low?
"Predicting the interest rate is very difficult," says Boelhouwer. "The general expectation is that interest rates will not rise much because so much capital has now entered the market. If the economy does not grow fast, that money will remain available, so that interest rates will remain low in the coming years."
In any case, Boelhouwer does not think that we will return to a situation with interest rates of 8 or 9 percent. "Economists also indicate that. Interest rates have been falling slowly for decades, no one expects high interest rates again."
So interest rates remain low and there may be a slight drop in price. Is that the time for starters to get started?
"You can see that there is currently more room for starters on the housing market," says Boelhouwer. "They no longer have to visit with thirty others. But whether you should buy now depends on your personal situation."
"If you are in a stable situation with a permanent job and you need a house, I would dare to do it now. In the worst case, house prices will drop even further." According to Boelhouwer, that is not necessarily a problem. Prices will rise again in the long term, so if you don't move, you won't be bothered by the lower prices. And if you do move quickly, your next home is relatively cheaper due to the lower prices.
There is at least one big advantage if you buy now: "Due to the low mortgage interest for long fixed-rate periods, you are assured of stable expenses for a long time."
But if, for example, you work in a vulnerable sector or you do not find it a problem to remain in your current situation for a few more months, Boelhouwer advises to be a bit more cautious and wait for the corona crisis to end.
The corona crisis is likely to cause the demand for new-build homes to fall. (Photo: Pro Shots)
Then the new-build homes. There is a lot of work to be done to solve the housing shortage, but is that still possible now that we are dealing with the nitrogen crisis and the corona crisis?
According to Eaco's Taco van Hoek, it will not be feasible to meet the construction target of 75,000 houses per year in the next two years. That goal was devised in 2018 to solve the housing shortage.
"Last year, the nitrogen crisis had a major impact on the number of permits," says Van Hoek. "There were at least 20 percent fewer permits than in 2018." This affects production this year and next.
The corona crisis can also seriously depress construction production, Van Hoek thinks. As unemployment rises mainly among young people, demand will drop. To start a new construction project, 70 percent of the homes must already have been sold before construction. Van Hoek expects that this will not be possible at an increasing number of locations.
According to Van Hoek, there is still a bear on the road: there is a shortage of building land. "This is mainly because we are committed to inner-city densification and that has two problems."
The first problem: to build within cities often requires moving businesses and infrastructure. After that, it sometimes turns out that the soil is contaminated, which increases costs and delays the project. Local residents also regularly object to new construction projects. Those procedures take a long time, so construction is delayed.
What can we do to build enough?
Van Hoek does have a number of ideas. First, he says, it is wise to boost demand by giving starters more room to finance their home. "The standards for a mortgage are very strict. Mortgage lenders currently only look at current income, but if they look at the career prospects, they could safely make more money available," says Van Hoek. If starters can borrow more, they can buy earlier and demand will increase.
A second option to get the new construction market going again would be to look at other locations. "There are still many plans on the shelf, which have been rejected by provinces, for example. If we take a critical look at them, we can get projects going again. And if we decide that 70 percent of the project does not have to be sold for the start of construction, all those projects can actually start. "
That does not cause any problems, according to Van Hoek. "There is a housing shortage, the demand for housing temporarily drops during the crisis and then picks up again strongly."