Dutch housing and property market news archive
Only One-Sixth of Economists Believe in Housing Accord
THE HAGUE, Tuesday - Only 16.5 percent of economists believe in the efficacious operation of the package of measures in the Housing Accord. Some 55 percent of them see nothing good in this package agreed nearly two weeks ago between the conservatives (VVD) and Labour (PvdA) and three opposition parties, it emerges from reactions within the economists panel of the independent discussion forum Me Judice.
One of the two statements to which the economists were asked to respond said: ‘The package of measures in the housing accord will lead to the housing market visibly recovering in the next two years, in terms of stabilisation of house prices, more housing transactions and more building activity.’ In total, 54 percent of the participating economists - with housing market expertise - disagree with this statement. Only 16.7 percent of them endorsed the statement. One-quarter ‘neither agree nor disagree’ and 4.2 percent have no opinion.
The other statement, that due to the raising of rents, flow-through on the housing market will get moving, was endorsed by around 60 percent of the economists. Some of them however consider the rent increases too limited. The results of the poll were released yesterday. In total, 48 of the 60 economists responded.
Eric Bartelsman, professor of economics at the Free University (VU) Amsterdam: "Decisions are still not being made on how the housing market should look in 30 years. If this is only done, you can draw up a transition path. Until that, all this policy remains completely nonsensical.”
Flip de Kam, honorary professor of economics of the public sector at the University of Groningen, does not expect the measures to reduce the uncertainties of home-buyers sufficiently. Arjen van Witteloostuijn, professor at Tilburg University, speaks of a “messy half-baked compromise package: too little, too late."
Economist Bas van der Klauw of the Free University Amsterdam and the Tinbergen Institute does see some good in the measures, but with some reservations. “The measures look reasonable. But the market will only recover if the consumer believes that government policy will not change again quickly.”
New Mortgage Construction Works out Unfavourably
THE HAGUE, Saturday - The complex mortgage construction drawn up by Housing Minister Stef Blok works out to be extremely expensive. The difference from other forms of mortgage amounts to tens of thousands of euros, De Volkskrant reported Friday.
Buyers that opt for a ‘Blok mortgage’ may save about 100 euros on their monthly costs, but will in due course easily spend 60,000 euros more on interest than buyers who pay back their annuity mortgages in full. Additionally, there will be mortgage debt remaining. For higher mortgages, the interest rate differential between the two forms of mortgage will even run into the thousands, according to the newspaper, which commissioned consultancy chain De Hypotheker to carry out research.
Blok’s spokesman confirmed the conclusions. “It is true that the net costs are higher, but of course buyers do not have to choose this form of mortgage. We only wanted to offer first-time buyers an extra choice. A mortgage is always a matter of matching to the individual.”
Assuming a typical first-time buyer situation (a family income of 50,000 euros and a mortgage of 200,000 euros) the monthly costs of a Blok mortgage are around 110 euros lower than thos of an annuity mortgage. But the difference between the two mortgages in interest paid would amount to nearly 60,000 euros after 30 years.
Home-buyers with a high income and a mortgage of 400,000 would be extremely badly off with a Blok mortgage. In exchange for savings of just 19,000 euros in mortgage costs in the first 30 years, they would on balance pay 120,000 to 220,000 euros more interest than people opting for a standard annuity mortgage, according to De Volkskrant.
House Prices 10 Percent down in January
THE HAGUE, Friday - Prices of existing owner-occupied dwellings sold in January 2013 were on average 9.6 percent lower than in January 2012. This is the most substantial year-on-year price drop ever recorded, the Central Bureau for Statistics (CBS) reported yesterday.
The steepest price drop since the price index of existing residential property was first recorded in 1995 is probably due to the introduction of new mortgage regulations effective from 1 January 2013, said CBS. "Presumably, many house buyers have taken advantage of the possibility to avoid the new regulations by taking out their mortgage prior to 1 January 2013. This resulted in a higher demand for residential property at the end of last year."
Prices of existing owner-occupied dwellings sold in January 2013 were at the same level as in the spring of 2003. They were more than 19 percent down from August 2008, when house prices reached a record high.
In the first month of this year, a total of 6,260 house sales were registered. House sales dropped nearly 12 percent below the level of January 2012.
Houses Sales Plummet in January
THE HAGUE, Tuesday - House sales crumbled in January. As new rules for mortgage tax breaks came into effect just 6,260 homes changed hands, 64 percent down on December, the land registry office (Kadaster) said yesterday.
Sales were down nearly 12 percent on January 2012. The sale of detached homes was hardest hit - down 29 percent - while corner homes were least affected. Sales were down across the country apart from Flevoland, where the number rose nearly 10 percent.
Sales surged in December as buyers sought to beat the introduction of new rules for mortgage tax breaks. Mortgages concluded after 1 January 2013 must be paid off in 35 years so mortgage interest deduction gets smaller every year.
The European statistics office Eurostat reported yesterday that the Dutch are more likely than any other EU nationality to live in a terraced or row house. Six out of 10 Dutch households occupy a terraced home and just 20 percent live in a flat.
Banks Not Ready for First-Time Buyer Mortgage Changes
THE HAGUE, Friday - It will take at least several more months before banks can offer the new first-time buyers mortgage from the Housing Accord. They find the mortgage variant, which requires that a maximum of half of the loan is allowed to be redemption-free, technically complicated.
"We are still studying the results of the Housing Accord. Much is still unclear,” said an ABN Amro spokesman yesterday in Het Financieele Dagblad newspaper. ING and Rabobank are also awaiting further clarification. This should arrive in March, when Housing Minister Stef Blok is to give more details.
The conservatives (VVD) and Labour (PvdA) recently concluded an accord on the housing market with three opposition parties. Part of this is that at least half of new mortgages must be paid off within 35 years.
But according to banks, a complex form of mortgage has been chosen, whereby the first-time buyers can take a second, redemption-free loan with which they can pay off a maximum of the first mortgage loan. The monthly mortgage costs will then be lower in the beginning; the government hopes this will help unlock the moribund housing market.
Banks mainly have technical questions about the mortgage construction. “We do not know, for example, whether the interest rate on the second loan must be the same as that on the first loan,” said the ABN Amro spokesman. It is also unclear whether the second loan has to be counted in determining the size of the actual mortgage.
Mortgage Interest 1 Percent-Pt above Neighbouring States
THE HAGUE, Saturday - Mortgage interest rates in the Netherlands are roughly 1 percentage point higher than in neighbouring countries, the Central Planning Bureau (CPB) says based on statistics from the European central bank (ECB). The CPB has carried out a study of this for Housing Minister Stef Blok.
Possible reasons for the higher interest rates include reduced competition on the Dutch mortgage market since the departure of foreign banks, according to the CPB. Interest rates may also be higher because the risks for banks have increased due to falling house prices and a depressed economy.
The CPB concludes that falling house prices largely explain the drop in consumption and lower economic growth in the Netherlands. Slightly less than half of the drop in consumption in the 2008-2012 period is attributable to the fall in house prices, according to the CPB.
House prices have plunged by about 20 percent since 2008 in real terms. Prices would be 5 percent higher than now if Dutch mortgage interest rates were at the lower average EU level, the CPB estimates.
Earlier this week, competition watchdog NMa had already reported that the margin that banks earn on mortgages has increased since the outbreak of the crisis. The Netherlands is an exception here in Europe. The NMa has no indications of banned price agreements, but blames the higher margins on a lack of competition on the Dutch mortgage market, where four banks, ABN Amro, ING, Rabobank and Aegon provide the service.
Accord on Housing Market
AMSTERDAM, Thursday - Conservative (VVD) Housing Minister Stef Blok has reached agreement on reforms of the housing market with centre-left D66 and small Christian parties ChristenUnie and SGP. This means a majority has been secured in both the Lower and the Upper House.
The coalition of VVD and Labour (PvdA) wanted to introduce a tax on the public housing corporations that could run up to 2 billion euros. This will be reined in to 1.70 billion. In this way, the corporations will have money left for house-building production.
Blok’s plan to allow rents for middle incomes to rise by a maximum of 9 percent a year has also been watered down. The maximum is now at 6.5 percent. This measure affects people with a gross income of over 43,000 euros a year with a rented home cheaper than 630 euros a month.
It has also been agreed that first-time home buyers must pay off at least 50 percent of the mortgage debt within 35 years. In the original plans, this was 100 percent within 30 years. This group will however be treated fiscally in line with the initial agreements so that their mortgage interest deductibility is wound down within 30 years.
Additionally, it has been agreed that the VAT rate for renovations and conversions of houses will be cut from 21 to 6 percent. This scheme, which will be in force for one year from 1 March, is intended to spur the building sector. Finally, there will be a small budget for encouraging the making of houses energy-saving.
It is not yet clear how much money the concessions by Blok will involve, and how the cabinet thinks it will be able to pay for this. But according to Premier Mark Rutte, the impact on the central government budget will be “slight.”