ING expects Dutch home prices to fall even further in 2023

Economists at ING predicted an even stronger fall in home prices than previously reported. The bank now expects homes to sell for an average price that is 6 percent lower than a year earlier. In December, ING predicted a fall of 2.5 percent.

The decline will continue until the middle of 2024, ING expects. At that time, average prices will be about 10 percent lower than at the peak in the summer of 2022. Once they have reached that low point, prices will be at the same level as in the autumn of 2021, not accounting for inflation, according to ING.

The housing market has been cooling off for some time, and prices consistently fell on a monthly basis during the second half of 2022. There was only a slight increase in January, but according to ING this seems to be a temporary development.

The main cause of the fall this year will be the strong rise in mortgage interest rates, which rose by an average of 3 percentage points in 2022, according to ING. That is considerable considering rates of only 1 to 2 percent were offered for many mortgages in 2021. The increase is partly due to central bank interventions against soaring inflation levels.

According to the bank, these higher borrowing costs mainly affect first-time buyers. People who already own a home can often work with a bank on an arrangement whereby they carry over interest agreements from their old mortgage to their new home.

But according to ING economists, other developments in the housing market have made it more likely for people to buy a home for the first time. For example, the further regulation of the rental sector has made investing in homes less attractive, so that first-time buyers may now face less competition from investors when hunting for a home.

Additionally, many people are seeing their income continue to rise to meet inflation, which in turn can increase the maximum amount they can borrow.