First-time buyers should have more chances on Dutch housing market by mid-2023: DNB
Thanks to falling home prices and rising wages, first-time buyers will soon have more chances in the Dutch housing market, according to an analysis by economists Gerard Eijsink and Dorinth van Dijk of De Nederlandsche Bank (DNB). “Affordability for starters will be better from mid-2023,” they said.
Home prices in the Netherlands started falling in August last year, but not faster than mortgage interest rates increased after the Russian invasion of Ukraine. Due to the higher interest rates, potential buyers could borrow less, and so, on balance, homes became less affordable.
But in the coming months, wages are expected to increase to compensate for the high inflation, and the DNB expects home prices to continue to fall. “The expected rise in incomes and a slowdown in house prices will ensure that affordability will eventually become better than at the end of 2021 before the interest rates started to rise,” the economists said. “Affordability in 2024 could be about 6% better than at the end of 2021.”
And any improvement in affordability is desperately needed. In 2022, a household with an average income of 67,500 euros could borrow up to 321,000 euros at an interest rate of 4%, while the average house price in the fourth quarter of last year was 415,000 euros.
A study by Calcasa showed that at the end of 2022, the average first-time buyer could only afford 3.4 percent of homes available on the Dutch housing market.