Covid crisis to stabilize, not decrease Dutch housing prices: ABN Amro
Instead of decreasing home prices in the Netherlands, the coronavirus crisis will instead stabilize them, according to ABN Amro economist Philip Bokeloh. Earlier this year, the bank expected the crisis to result in a 2 percent drop in home prices next year, now it expects prices to remain stable.
According to Bokeloh, a big reason for the housing market to remain stable despite the coronavirus triggered economic downturn, is the shortage of homes in the Netherlands. The low mortgage interest rates also play a major role.
Due to the housing shortage, paying more than asking price is still the norm not the exception. And this, in turn, pushes asking prices higher. The low mortgage interest rate makes people less hesitant to lend.
Figures from realtors' association NVM showed that in the second quarter, homes were sold on average 28 days after being put on the market. Bidding prices on average were 1.5 percent higher than asking. And that while asking prices on average increased by 4.4 percent in September, compared to the same month last year.
According to Bokeloh, housing prices expectations can change if mortgage interest rates rise and if there is a wave of layoffs due to the coronavirus crisis. The latter is still very uncertain. But Bokeloh believes that the mortgage interest rate will be reduced "a little further" in 2021 if the financial markets remain calm.