Rising interest rates, falling house prices, fewer deals, more properties – it can’t be said the Dutch housing market has been dull in 2022 – anything but!
We started out with an annual house price rise of 21% and are concluding the year with house prices going down. In fact, according to the national statistics agency CBS, the price of the average house has dropped by around €18,000 over the past three months.
Interest rates started out at around 1.4% for a 10-year fixed mortgage, and this month, we are looking at upwards of 4.5%. More properties come on the market, but fewer people are buying. The number of transactions registered with the Kadaster land registry office actually fell by 17% in the first 10 months of the year.
At the same time, the government has been tying itself in knots trying to boost the supply of affordable housing and developers are warning the plans will defeat the aim. . Little chance then of a surge in new properties coming on the market next year.
All in all, it has been a headline-generating year which has left many people looking to buy a home unsure of what to do. Looking ahead to 2023, however, there are some bright spots on the horizon. For a start, the government is increasing the transfer tax on buy-to-let properties from 8% to 10.4%, in an effort to dissuade people from buying up homes as an investment – so that may mean more properties become available for first-time buyers or people looking to move.
Ministers have also decided that first-time buyers up to the age of 35 will not have to pay transfer tax on the first €440,000 of the price of a property – that’s a 10% increase on the situation this year.
And if you spot a bargain, you might be able to qualify for the national mortgage guarantee scheme, or NHG, which will now cover properties up to €405,000. You do get a slightly lower interest rate under the NHG guarantee scheme, and if you find yourself in financial difficulty or forced to sell at a loss, you may well be eligible for help.
And don’t forget that you can borrow more than 100% of the property’s value if you plan to invest in boosting its energy efficiency – and who isn’t given current energy prices?
It is worth noting too, that the tax deduction on mortgage interest will go down a little, from 40% to 37.05% next year. But the government has agreed that if you are a couple, 100% of your partner’s salary can be added to the total when working out how much you can borrow. This year, the figure is 90%. So that gives you a little more scope to borrow more.
And if you are already a home owner in Amsterdam, you will get a second chance to buy off your ground rent, or erfpacht, in one go – if you did not do so first time round. And that is definitely worth considering, given that ground rent is linked to inflation. Make sure you get expert help to decide what to do though – erfpacht is a complicated issue!
Of course, these are all things which we know are going to happen next year because they have been formally announced by the government. But if this year’s market has been anything to go by, we must expect the unexpected as well.
My predictions? I think we will see interest rates stabilise and house prices fall a little more. So if you are considering to make buying a home your New Year’s resolution for 2023, my advice would be to make sure it is the one resolution you don’t break!