First time buyers to have a slightly easier time on the Dutch housing market in 2021: ING

The average first time buyer will have a somewhat easier time on the housing market next year, according to economists at ING. The coronavirus pandemic will lower prices slightly, and a higher transfer tax for investors will increase supply somewhat, the economists predict, RTL Nieuws reports.

ING expects that owner-occupied homes will be 0.5 percent cheaper in 2021 than this year, on average. After a peak in the first quarter of next year, there will be a slight price drop that will continue until early 2022.

The main reason behind this is the coronavirus pandemic, which will increase unemployment and lower confidence in the course of next year. As a result, more people will postpone their moving plans, causing demand to fall. ING expects the total number of home sales to drop by over 10 percent next year, to around 200 thousand transactions.

First time buyers are also expected to benefit from a change in transfer tax, somewhat at least. On the one hand, this tax will be scrapped for first time buyers under the age of 35 buying their first house at a price up to 400 thousand euros. On the other hand, sellers are aware that first time buyers therefore have more to spend, so will likely increase the price. The transfer tax for investors is increasing from 2 to 8 percent on January 1. ING expects this will reduce investor demand for housing, which could mean a bit of an increase in supply for first time buyers looking for a home.

Mortgage payments are also expected to decrease slightly, from 24 to 23 percent of disposable income. Combine that with wages and income being taxed less heavily from next year, and first time buyers will have on average more left to spend on their home next year, the bank expects.