Housing prices to fall 8% in EU with “years of declining” prices in Netherlands
Home prices in the Eurozone will fall in the next two years, and the Netherlands and Germany will be hit hardest with a fall of around -8 percent by the end of 2024, according to credit insurer Allianz Trade.
Johan Geeroms of Allianz Trade spoke of a “brutal turnaround” for the Netherlands. Since the low point in the housing market in 2013, Dutch home prices have only increased. In January 2022, the Netherlands still reported record home price increases of above 20 percent. “After ten years, this is now coming to an end, and we are heading for years of decline.”
In Sweden, home prices have already fallen some 14 percent. Earlier this month, the Swedish central bank Riksbank reported that home prices fell by 17 percent in Stokholm, dropping back to the price level of December 2020.
Economists think the situation in Sweden could be a harbinger of what will happen elsewhere in Europe, according to Parool. As in Sweden, the Netherlands has also seen mortgage interest rates rise due to the European Central Bank hiking interest rates. Netherlands residents can therefore borrow less on their mortgage, which could lower home prices.
But the situation is slightly different in the Netherlands than in Sweden. Unlike in Sweden, fixed mortgage rates are more common in the Netherlands. Many people in the Scandinavian country have variable interest rates on their mortgages, meaning homeowners feel the interest rate hikes more quickly. The housing market in the Netherlands is also still extremely tight, which should keep prices higher.
Allianz Trade also thinks that the price fall in the Netherlands won’t be as bad as in Sweden. “Various developments continue to support house prices. Due to the housing shortage, demand remains intact. There is also no question of rapidly growing unemployment,” Geeroms said. Netherlands residents also have a lot of savings and substantial equity in their properties. All this should protect the housing market from a freefall.
