2016 on track to become a record year for Dutch housing market
The number of houses sold in the Netherlands in 2016 is exceeding all expectations, and if current trends continue, it could even surpass the record year of 2006.
The ABN Amro Economisch Bureau just released a report that shows the Dutch housing market is stronger than what was projected earlier this year. In the first five months of 2016, 25 percent more homes were sold than the year before.
Economists now predict that the rest of the year will see a 15 percent increase, while in March they had expected a 10 percent rise in home sales. For 2017, the current projection is a further increase of five percent.
The ABN Amro report does not take into account any potential negative consequences from the Brexit referendum, as it is too early to pinpoint any concrete effects on the Dutch housing market.
Historically low interest rates
ABN Amro cites the record-low interest rates as one of the main reasons for the strong housing market in the Netherlands.
The Dutch central bank De Nederlandsche Bank expects that it will take another two to four years before the interest rate increases.
Mortgage lenders have in 2016 continued to lower their interest rates, and there currently are very few signals that this trend will change in the near future.
The significant rise in house sales is also attributed to more flexible mortgage rules for two-income households. Couples who jointly apply for a loan to buy a house are now able to get higher mortgages than before, which increases their buying options on the market.
Highest house price increase in 8 years
The prices of existing homes in the Netherlands increased by an average of 4,3 percent in March, compared to the same period in 2015. This is the most significant increase in eight years, according to the Central Bureau of Statistics.
Compared to all of 2015, prices are up by 4 percent, and for 2017 the projection currently is a 3 percent increase.
The Brexit effect on the housing market
The aftermath of the Brexit referendum could slow down the booming housing market, analysts fear.
Political uncertainty fuels economic turmoil, which can affect the job market, which in turn discourages people from making major financial commitments such as buying a new house.
For this reason, economists think it is possible that the impressive sales numbers from the first five months of 2016 won’t continue on the same level.
Should the housing market be unaffected, however, and the trend continues for the rest of the year, the projected final number of transactions would be 223.000, 13.000 more than the previous record year of 2006.
If there is a slow-down due to the Brexit aftermath, ABN Amro expects a total of 205.000 houses to be sold in 2016. Right now the Brexit situation makes any long-term predictions difficult to make, however.