- Number of housing transactions hit new record in 2016
- Rising interest rates bring peak in sight
- Persistent housing shortages drive up prices
The Dutch housing market continued its remarkably strong recovery in 2016. Housing sales hit record highs and prices soared. But there were marked regional differences. The recovery was mainly visible in the larger cities.
Multiple causes are fuelling the revival. The most eye-catching are low interest rates and insufficient construction activity. The economic upturn has also made home buyers more confident. Finally, pent-up demand remains as strong as ever. We expect these factors to continue propelling the housing market in the coming years. Additional impulses, effective from 1 January, are the less stringent mortgage income criteria for many households, the increased NHG mortgage guarantee limit and the expansion of the gift exemption.
Despite all these positives, the housing market will gradually lose momentum. Sales will peak first, after which the price increases will also start to slow. The weakening is partly due to the falling number of entrants into the market. First-time buyers will have a harder time finding suitable properties because of the elevated prices and stricter mortgage criteria, though some can benefit from the expanded gift exemption. Another factor dampening the transaction volume is the lack of suitable properties for sale. Finally, the housing market will become less affordable as mortgage rates start to rise.
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