Buyers take more risk in heated housing market

ABN AMRO's Economics Department raises its predictions for the development of the housing market for the third time in a row this year. A house price increase of 12,5% this year and from 5% in 2022, while earlier became gone out of respectively 7,5% in 2,5% price increase. This is apparent from the new Housing Market Monitor by July 2021.

 

Offer above asking price

Under the current heated market conditions, buyers in Egmond and Bergen have little time to think about buying a home. They are afraid that they can no longer buy a house due to rising house prices and are therefore in a hurry to complete a deal. “Buyers have to take more risk to have a chance of buying a home,”Aldus Philip Bokeloh, senior economist at the ABN AMRO Economics Department. They do this by, for example, bidding higher than the asking price and dropping sales conditions, such as reservation of financing or building inspection. In addition, buyers are now trying to take out a higher mortgage in proportion to their income by opting for an interest-only mortgage and waiving the right to mortgage interest deduction..

 

Abolition of transfer tax

At the beginning of this year, the transfer tax for starters was reduced to 35 year abolished. The Economic Bureau sees this as the main reason for the large number of houses sold between January and May. It's about 102.000 existing homes; these are there 10.000 more than in the same period of 2017, the year that a record number of homes were sold. Yet the Economic Bureau thinks this increase is not permanent. Bokeloh: “The forecast for the number of home sales remains the same. For this year we expect a decrease of 10%. Next year, we believe that the number of home purchases will increase by another 5% decrease."

 

Divided sentiment towards housing market

Especially among home sellers in Egmond and the rest of the Netherlands, there is a positive sentiment towards the housing market. This is apparent from the indicators of the Home Owners Association and the NVM. The confidence has, after a decline at the beginning of the corona crisis, quickly recovered. It is easy for sellers to sell a home for a good amount and within a short time. Home seekers see it less positively; Although the mortgage interest rate is low, it is still difficult to take out a mortgage because house prices are so high. In addition, they have little choice in housing and it is difficult for them to find a place due to the large number of home seekers.