How will COVID-19 affect the Dutch housing market?
COVID-19 is forcing a lot of governments to take extreme measures, including the Netherlands. Though there are promising measures taken it will unmistakably have an effect on the Dutch economy. And if the economy is impacted, the housing market will also be impacted. The extent of that impact and how quickly it will recover (for it will recover) will depend on how long it takes for us to get back to normal. As things stand, we don’t know how long that will be. There is much speculation in these uncertain times and a lot of people are chipping in on what the effects will be. Instead of sharing our own thoughts we have carried out some research, and have listed the articles that have been published on the matter to help you digest it all.
On Funda.nl, our research has shown that the number of homes being offered for sale has declined by 25%, and the amount of activity on the website has also dropped.
However, the market is still moving - viewings are still taking place, and buyers are still offering amounts over the asking prices. Market activity has undoubtedly declined, but the underlying characteristics of the property market remain unchanged, and prices have not yet dropped. People are still looking to move.
In terms of borrowing, banks are increasing interest rates. With a reportedly sharp decline in market activity, economists from ABN AMRO predict house prices to level off in 2020 and drop in 2021.
To top it all off, the Municipality has increased their taxes by 5% since last year. The increase is reportedly linked to the rise in house prices.
The good news is that banks and mortgage providers have reached an agreement with the government not to take action if homeowners default on their mortgages, up to at least 1st July 2020.
There is also some good news for the rental market, as the government is taking a number of measures to ensure that as few people as possible get into financial difficulties as a result of the coronavirus.
With regards to the Dutch economy, there is a report that was carried out by the CPB (Netherlands Bureau for Economic Policy Analysis), which estimates four potential scenarios. All scenarios predict an economic downturn in 2020, with varying degrees of impact depending largely on the length that the social distancing restrictions are in place.
From best case, to worst case scenarios, the Dutch Economy is predicted to shrink between 1.2% and 7.3% in 2020. The unemployment rate is predicted to rise to between 4.0% and 6.1% in 2020. Much depends on how long the measures around curbing the coronavirus will be in place for. The best case scenario put forward by the CPB is 3 months. The worst case reflects measures remaining in place for 12 months. The bigger the impact on the economy, the less disposable income people will have, and the more the property market will be impacted.
With regards to the Coronavirus impact on various sectors within the Dutch economy, our research shows that the Construction sector has been highlighted as one of the most impacted sectors, suffering a predicted 4% downturn in 2020. This is likely to have a knock-on effect on the already stretched supply chain.
New reports and information are coming out on a weekly basis and this is just a selection of articles. Have you read something that we can or should add to this article? Please feel free to send it to us at email@example.com and we’ll look into adding it.
Thanks, be well and take care.
Written by Dominic, from our Amsterdam buying team