House prices falling faster than predicted, ABN AMRO says
While last year saw ABN AMRO predict that house prices in the Netherlands would fall by up to 2,5 percent in 2023, more recent forecasts by the Dutch bank show that house prices are falling faster than initially expected and that the cost of buying a house in the Netherlands will actually fall by 6 percent this year.
Dutch house prices to fall by 6 percent (not 2,5 percent) in 2023
After about a decade of significant price hikes on the Dutch housing market, the last couple of months have been a turning point for house prices in the Netherlands; the most recent figures from Statistics Netherlands (CBS) and the real estate association NVM show that in the fourth quarter of 2022 house prices fell by an average of 2,4 percent.
This drop is certainly in line with the forecasts published by both ABN AMRO and Rabobank last autumn, but ABN AMRO has recently revised its predictions. Now, the major Dutch bank reports that prices on the housing market will fall by an average of 6 percent in 2023 and 4 percent in 2024.
While the bank’s predictions aren’t outside of the realm of possibility, it’s worth noting that the figures reported by ABN AMRO are significantly higher than those forecasted so far by other Dutch banks. ING, for example, says house prices will fall by just 2 percent this year, while the Dutch Central Bank predicts a drop of 6 percent over the course of 2023 and 2024 combined.
Does this year mark a turning point for the Dutch housing market?
ABN AMRO attributes this significant drop to a number of factors, most notably the high interest rates on mortgages and the fact that salaries in the Netherlands aren’t keeping up with rising costs. The trend of overbidding on properties also seems to be dying out, with buyers now more inclined to take their time, consider their options and analyse the quality of the property more thoroughly.
"We were wrong, house prices are falling much faster than we thought," explains ABN AMRO’s housing market economist Philip Bokeloh. “In recent years we were also wrong and we had to adjust the estimates upwards. Now we are in the opposite boat.”
While things do seem to be changing, Bokeloh notes that the falling prices won't make housing in the Netherlands significantly more affordable; "The price drop is less dramatic than it seems, after the frenzied price increases of recent years. We are going back to the price level of mid-2021."
Thumb: T.W. van Urk via Shutterstock.com.