What influence does coronavirus have on the housing market?
Arjen Hardesmeets from Expat Mortgage Platform talks us through the impacts the coronavirus crisis has had on the Dutch housing market, and what the future might have in store.
Will the housing market also be hit by the COVID-19 crisis? Will houses be worth much less in the near future, just like during the credit crisis? These are frequently asked questions. For the time being, the effects seem to be better than expected.
Let's look at the facts.
A stable market
For a moment it seemed that the COVID-19 virus would immediately have major consequences for the housing market. In the first weeks after the lockdown, the number of appointments for viewings dropped immediately. People were outbidding the asking price of houses for sale less regularly.
Many homeowners held their breath. Particularly people who had already bought a new house based on the expected sale price of their current home. But the situation soon appeared to stabilise. In fact, a month after the prime minister's first press conference, multiple brokerage organisations reported that they were just as busy, if not busier than they were in the days before COVID-19.
House prices have not fallen
The stable situation means that house prices remained roughly the same in the period from mid-March to mid-July. Of course, nobody knows if it will stay that way. But the situation in the Dutch housing market today cannot be compared to that during the crisis of 2008. Why?
The housing shortage
This is mainly because the housing shortage in the Netherlands in 2020 is much higher. There is currently a shortage of about 315.000 houses in the country. That is more than twice as many as during the credit crisis. The demand for houses is, therefore, greater than the supply. So buying a home is still very popular.
There are also other factors. For example, some landlords and economists expect that the COVID-19 crisis will, in time, have an effect on the market for owner-occupied homes.
Furthermore, some people expect to postpone the purchase of a house because they are unsure about their income. If people start to earn less and the mortgage interest rates rise, they may no longer be able to pay the current high amounts for owner-occupied homes. Such a scenario could lead to falling house prices. However, certainly in specific regions and larger cities, the expectation is that the need for (affordable) housing will exceed the supply.
Unfortunately, no one has a crystal ball. Me neither. Altogether, although we are living in a difficult and even unpredictable time, in my opinion, the future of the housing market is still positive.
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