Number of home sales to drop 17% this year: ABN Amro
Due to the rising mortgage rates, ABN Amro expects even fewer homes to change hands this year than previously thought.
The bank now expects home sales to fall by 17.5 percent in 2022. Previously, economists predicted a 15 percent decline. For next year, the bank expects a 2.5 percent decrease instead of the previously anticipated stabilization.
This will also affect the house prices with “some delay.” Because buyers can borrow less, the home price increases will slow down. According to the bank, the average price increase will be 15 percent this year and 2.5 percent next year. “The price development will also be limited in the years that follow. Due to the loss of purchasing power as a result of inflation and high energy costs, there is less room for mortgage spending,” said Philip Bokeloh, housing market economist at the bank.
First-time buyers will suffer the most from the higher interest rate and a decrease in the maximum allowed loan amount. That is because they have little savings and have to finance a large part of the purchase amount through the mortgage. In addition, young home buyers, unlike those who move up, have no equity and cannot take a previously concluded low mortgage interest with them when moving,” Bokeloh said.
According to him, first-time buyers more often take risks to be able to buy a home by borrowing higher amounts. This means that first-time buyers who have recently bought a home are most vulnerable to an income drop or a correction in house prices.
Reporting by ANP