House prices (hard) in Canada and Australia, will the Netherlands follow?
An Amsterdam hovel for a barrel of 8. In recent years, that could hardly be called exceptional. The question is: will house prices rise much further or was this it? Last week it was announced that people looking for a home will have more choice: there is something more for sale.
And more supply, which makes the chance of less rapid or even falling prices. In some regions there is a stabilization or even a slight decline, such as in Rotterdam. This is not yet the case in most regions.
Drop of 14 percent
How different it is abroad. We call Canada. The country’s largest city, Toronto, sees house prices to collapse† The price at which a house is now being sold is 14 percent lower than last February. Prices in the United States also no longer seem to be rising so fast.
Same picture in Australia. House prices are there for the second month in a row failed† Finally, we mention New Zealand. There was a 2.3 percent decline in the past quarter. That’s the largest decrease in 13 years.
Last year it was not crazy in other countries and RTL Nieuws made a video about that:
What is the cause of these price drops? The key word: the rent. Specifically the rent due to that other keyword: construction. If you want to know everything: that shopping cart at the supermarket has become a lot more expensive, your energy bill may have scared you and some houses have become worth a lot.
It rises so much that it has become a problem. That is why many national banks have the interest. That makes it more expensive for your bank to borrow money. And they pass that on to companies and people who are their customers.
Higher mortgage interest
If you want to buy a house and you knock on the door of the bank, it will ask a higher mortgage interest. You will then lose more money for the same house, because of that rent. And it becomes less attractive to buy a house. The demand decreases and as a result the prices fall and thus the.
The central banks of Canada, the United States, Australia and New Zealand have already set interest rates further and higher than we do in Europe. The European Central Bank (ECB) is doing so for the first time this month. The rent increase by half a percent from -0.5 to -0.25.
That is not the case with Australia, for example. The interest there will be set for a . next week third time s, to plus 2.5 percent.
America moves on
The US central bank has also gone further than Europe so far. After a number of increases, the interest rate there now fluctuates around 1.75 percent. “As a result, we see the housing market cooling down,” Philip Marey told RTL Nieuws. He is an economist at Rabobank and specializes in, among other things, the American housing market.
“But because of the rate hikes, the United States is heading for a recession. You can normally avert that by lowering the rate hikes. But that is not possible now, because first the economy has to be pushed out of the economy.” In other words, it’s all about tackling the good qualities of a recessive.
Australian house prices drop 20 percent
That is also a dilemma faced by countries such as Canada, Australia and New Zealand. For the time being, the choice is mainly to see the. And ensuing Australian experts say that interest rates can go up to just under 3 percent and that the average may fall as much as 20 percent.
Are these countries a good indicator of what awaits the Netherlands? Somehow, Rabobank economist Nic Vrieselaar told RTL Nieuws. “The English-speaking countries have the same kind of economy as the Netherlands.
You would expect that the Netherlands faces the same fate as the English-speaking countries, but there are also differences. “For example, the interest rate policy in the Netherlands is determined by the ECB. And that the same interest rate is fixed for the Netherlands and Germany and Italy and all those other countries. That percentage can be beneficial for Italy, but not for the Netherlands. can set an interest rate much more specifically for that specific country.”
Whether a higher ECB interest rate will actually lead to lower house prices in the Netherlands is difficult to predict. Also because it is not clear what will be done with the interest in the rest of the year and unemployment will rise.
‘Prices will stagnate in 2023’
Vrieselaar says the following about it: “In our most recent housing market forecasts we assume that mortgage interest rates may fall again later this year and that unemployment will last for a limited time. In that case, we think that house prices will first rise, but will stagnate in 2023. But if interest rates remain or become higher and unemployment is stronger, we will assume (hard) price falls.”
And then the word that no one is waiting for: housing crisis. Death is not excluded. “If the houses start to fall, many people will wait to buy,” says Vrieselaar. “As a result, prices will fall even faster. That entails the risk of a housing market crash.”
Don’t make the housing market too big
“That crash can then radiate to the rest of the economy. People then have less confidence and less desire to spend money. That is why it is so important that the housing market is not used too much by policymakers to create wealth. risk of contagion to the real economy.”
The more positive note
It’s not all doom and gloom. Earlier in the article, the expectation of an Australian expert was discussed. He said houses could fall in prices by up to 20 percent. But is 20 percent actually a lot?
Nic Vrieselaar: “In 2008, at the start of the great economic crisis, the average house price in the Netherlands fell by about 21 percent. And with that to the level of six years before. If house prices now fall by that percentage, then we will go back to the level of January last year.”
“That shows how much prices have exploded in recent years. A decline of about 20 could almost be called a healthy correction. And starters won’t be sad about it either.”