Dutch housing prices could fall 3% next year, 2% in 2024, says Rabobank
The increasing mortgage interest rates will cool down the Netherlands’ housing market fast, economists at Rabobank expect. They think house prices will fall 3.1 percent next year and 2.0 percent in 2024. “By the end of 2024, home prices are expected to be 7.4 percent lower than today, roughly at the level of the last quarter of 2021,” Rabobank said.
Due to sharp price increases early this year, Rabobank expects that home prices will come out 13.7 percent higher in 2022 than in 2021.
Mortgage interest rates have risen sharply, following capital market interest rates increased to battle inflation. People who take out a mortgage now pay 3.0 to 3.5 percent more interest than those who borrowed money for a home at the start of this year. That reduces the amount home buyers can afford to borrow as it significantly increases the monthly costs.
If interest rates increase even more, house prices will fall harder, Rabobank expects. If central banks increase the capital interest rates by another 1 percent, house prices will drop by 3.5 percent in 2023 and 3.2 percent in 2024. “In that scenario, house prices at the end of 2024 will be 9.4 percent lower than in the summer of 2022.”
“Typically, home sales decline during the downward part of a housing market cycle. We expect no exception this time,” Rabobank said. “Last year, the number of transactions decreased mainly due to a lack of supply. But in the coming years, we expect the number of home sales to fall as buyers drop out.”
Many people are still looking to buy a home, and more houses are coming up for sale. But due to the combination of increased interest rates and high house prices, potential buyers still have a nearly impossible time finding a home they can afford.
Rabobank expects home sales will be 17 percent lower this year at 188,000 transactions. Next year, only 179,000 homes will change ownership, followed by 184,000 in 2024. If interest rates remain as high as they are now in the coming years, house sales will probably only recover after 2024.
