Confidence in housing market falling; Uncertainties could stagnate construction
Confidence in the Dutch housing market continues to decline now that house prices are no longer rising as fast as before, ING noticed in a survey among homeowners, tenants, and people who plan to buy a home in the next two years. Uncertainties in the market could cause housing construction to stagnate, Minister Hugo de Jonge warned in a parliamentary debate on Thursday.
According to the bank, an increasing proportion of people believe house prices will level off. Partly because of this, the barometer the bank uses for its housing index deteriorated again. “You can see clearly in our research that homeowners, especially those who want to move, are concerned about the future value of their home,” said Wim Flikweert, manager of housing at ING.
Whether that concern is justified remains to be seen. The housing market is cooling down a bit. But there are also a few important factors supporting the housing market, Flikweert said. “For example, the large housing shortage and the labor market tightness. And the agreements in collective labor agreements to increase nominal incomes. I, therefore, do not see a major fall in house prices happening soon.”
According to Housing Minister Hugo de Jonge, uncertainties in the market could stagnate housing construction. He thinks the goal to build 80,000 homes this year will be achieved, but hinted that the intended 90,000 homes for next year might fall out of reach.
De Jonge pointed out the higher prices for building materials, partly due to the war in Ukraine and the inflation it's causing. Rising interest rates, the lack of building land, and the lengthy permit procedures could also throw a spanner in the works. Before the end of 2030, the government wants to build 900,000 new homes. According to De Jonge, that goal still stands. “In a headwind, you have to kick harder.”
The Minister wants to boost housing construction, among other things, by quickly clarifying his plan for regulating mid-market rents. According to him, this should give investors certainty about what kind of return they can expect. And if they invest in mid-market rents, the growth of social rent will also continue. According to De Jonge, the two housing types are often part of the same complex.
The Minister will be able to say more about this in November, but he did outline that the limit for mid-market rent will be around 1,000 euros per month. Furthermore, De Jonge wants homes for the middle segment to be allocated to people with middle incomes. The changes will only apply to new contracts.
The association of real estate agents NVM previously expressed concerns about De Jonge’s plans to regulate the mid-market rents. Acting chairman Lana Gerssen said in practice, it would have the opposite effect and result in investors being less keen on investing in the segment.
Tenants’ association Woonbond called the limit of 1,000 euros “way too low.” The limit must be at least 1,200 euros “to ensure that we really tackle extortionate prices,” a spokesperson said. “Otherwise, you can still rent out a mini-loft for huge prices in a somewhat popular municipality.”
Reporting by ANP and NL Times