Is it still the right time to buy a house in the Netherlands?
With mortgage rates rising and inflation mounting, many are wondering if buying a home is still a wise choice. Some expect prices to stabilise or even fall, adopting a “wait and see” approach. Let’s explore whether now is indeed the right time to buy.
Interest rates and house prices in 2022
Interest rates may be rising, but historically they remain low, and housing supply is still tight. Even with market fluctuations, buying now could still be advantageous. House prices have increased steadily since 2013, nearly doubling in that time.
Over the decades, Dutch house prices have generally risen, apart from a dip during the financial crisis. This trend has been partly driven by low interest rates, which have fallen from around 12% for a 10-year fixed period in 1982 to approximately 3.5% today. However, recent rate hikes are impacting potential buyers.
Impact on first-time buyers
First-time buyers, especially those without equity, are being hit hardest by rising interest rates. While wages are increasing, inflation is outpacing them, reducing overall purchasing power.
Is it smart to buy a house right now?
There are indications that price increases may be slowing, particularly for high-end properties, and homes are staying on the market slightly longer. But will prices drop enough to make waiting worthwhile? With inflation outpacing interest rates, buying now might still be a smart move, as borrowing becomes more attractive in a high-inflation environment.
In the 1970s, high inflation and steep tax rates led to a surge in house prices, which only stabilised when interest rates spiked and inflation cooled. The European Central Bank recently raised rates by 0.25%, but the full impact on the housing market remains to be seen.
Supply shortages and rental market changes
Supply constraints further complicate the market. Government initiatives to increase housing supply take time, and new rental regulations could reduce rental availability, driving more demand into the owner-occupier market.
A long-term perspective on buying a home
If you can afford to buy now, it’s still a strong investment choice. While deals may have been better last year, real estate is a long-term commitment. Short-term market changes are less significant for buyers planning to hold onto their properties for the foreseeable future.
Questions about buying in the Netherlands?
If you have any questions about purchasing a home in the Netherlands, feel free to get in touch.
