First-time buyers facing more competition on the housing market

After a year of gaining ground in the housing markets, first-time buyers are facing more competition again. The number of mortgage applications by homeowners moving up the property ladder has increased just as rapidly as among first-time buyers in recent months, the Telegraaf reports based on figures from De Hypotheker.

Over the past four months, the total number of mortgage applications has increased by 20 percent. The growth in applications from those moving up the property ladder is now equal to that from first-time buyers, with both rising about 20 percent. According to De Hypotheker, first-time buyers’ rise in the housing market that started in the middle of last year has now come to a halt.

Young first-time buyers have the advantage of not paying property transfer tax. But those moving up the property ladder have several other advantages that may be even more significant, De Hypotheker said.

“For example, they have equity in their existing home and a favorable mortgage interest rate relocation scheme. This puts them in a significantly better starting position than first-time buyers, who typically start with less equity,” De Hypotheker said. “Despite the consistent growth in applications, existing homeowners currently seem to have an advantage in the housing market.”

Due to the financial advantages, homeowners moving up the property chain can buy a significantly more expensive home than a first-time buyer for virtually the same monthly payment. “The difference in purchase price can amount to over €100,000.”

Young homeowners in the 25-35 age group were particularly active in the housing market in the past quarter. The number of mortgage applications by this group rose by 40 percent, while the figure for first-time buyers in the same age group was +16 percent.

“Given rising house prices, it’s becoming increasingly important for first-time buyers to have sufficient equity, while those moving up the property ladder can benefit from the equity in their home,” said Boudewijn de Jong, a mortgage advisor at De Hypotheker. “We therefore advocate for a greater supply of affordable housing for first-time buyers, so that their chances in the housing market also improve.”

This doesn’t mean that first-time buyers are losing ground, however. They’re currently still benefiting from the fact that many landlords are selling off their rental properties into the owner-occupied market due to rent regulation. And like other home buyers, first-time buyers are benefiting from slightly lower mortgage interest rates and higher wages. The average mortgage amount for first-time buyers rose by 6.4 percent to €345,612. For those moving up the ladder, the increase was 3.1 percent to €364,300.