A third of homes still selling above asking price, compared to 80% a year ago
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- 12 May 2023
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According to Peter Boelhouwer, a housing market professor at TU Delft, roughly 30 percent of homes on the market are being sold above their asking price, a sharp decrease from last year's 80 percent. Boelhouwer predicts that housing prices will continue to drop in the coming months, with stabilization likely towards the end of this year or early next year.
Boelhouwer notes that for the first time since the housing market heated up, average asking prices have dropped below the average prices of completed sales, creating more negotiation opportunities for first-time homebuyers. Higher wages also mean prospective buyers, including first-timers, can borrow more to purchase a home, with wages covered by collective agreements growing by an average of 5% in Q1, the highest in 40 years.
However, there are still several challenges for those looking to buy a home, particularly first-time buyers. Mortgage interest rates have risen significantly, reducing their borrowing capacity by up to 3% depending on income, resulting in roughly 15% higher mortgage payments. Moreover, first-time buyers cannot transfer any remaining mortgage and accompanying low interest rates to their new property, as they have no existing home to sell.
In addition, the current housing market is tight, with buyers having limited options to choose from. Boelhouwer noted that a "stable market" should offer around five to six options, whereas current buyers can only choose from roughly three homes.
One potential advantage for first-time buyers is the sale of homes en masse by private investors, which could create more opportunities for them. However, the housing supply in the Netherlands is declining due to a decrease in new construction permits, with fewer permits being issued for seven consecutive quarters. Additionally, the construction of homes that have received building permits may slow down due to rising interest rates and increased construction costs.
"The housing market's real madness is over, but first-time buyers' position has not significantly improved," summarized Boelhouwer.
