A third of homes still selling above asking price, compared to 80% a year ago
Roughly 30 percent of existing homes are selling for more than their asking price, compared to 80 percent a year ago, said Peter Boelhouwer on Thursday. The housing market professor at TU Delft spoke with RTL Nieuws earlier this week. Boelhouwer said he believes that housing prices will continue to decline for some time before stabilizing towards the end of the year or early next year.
Boelhouwer said that the market has now cooled off to a point where it is the first time since the real estate market heated up that the average asking prices are below the average prices of completed sales. This situation creates more room for negotiation for first-time buyers. Higher wages mean prospective homebuyers, including first-time buyers, can borrow more money to purchase a home, and wages covered by collective agreements grew by five percent in the first quarter on average, the highest in 40 years.
However, there are several challenges for those looking to purchase a home, particularly for first-time buyers. Mortgage interest rates have risen considerably, reducing their borrowing capacity by about three percent depending on their income. This is having an impact where borrowers now have to pay back about 15 percent more mortgage payment. Moreover, first-time buyers do not have a home to sell, preventing them from transferring any remaining mortgage and the accompanying low interest rates to their new property.
Another issue is the current tight housing market, with buyers having limited options from which to choose. Boelhouwer indicated that “a stable market” should present around five to six options, in contrast to the current situation where buyers can choose from roughly three homes.
One potential advantage for first-time buyers is the sale en masse of homes by private investors, which could create more space for them. However, Boelhouwer observed that the housing supply in the Netherlands continues to decline due to a decrease in new construction permits. Fewer permits have been issued for seven consecutive quarters. Additionally, the construction of homes that have received building permits might slow down due to rising interest rates and increased construction costs.
“The real madness in the housing market is over, but the position of first-time buyers has not significantly improved,” the professor summarised.