The housing market, and 2022 in general. It was a crazy year. Last year we started the year in Spain. I was in a wheelchair and wasn't allowed any alcohol. Not really the start to the year I'd pictured. We came back and Gé had corona. After 3.5 weeks of not working, we decided that I'd go and live in a short-stay apartment at The Anthony for 10 days and Gé would work from home. I discovered Lombok by doing my shopping and taking my evening walk there, and ‘lived’ for a while in a cool loft. A bit like living on the Muntkade.
Contents
- What is the solution for the overheated housing market?
- What does the war in Ukraine mean for the housing market?
- We live too large
- Mortgage rates are rising: what does that mean for you?
- Is it a good time to buy a house?
- Are house prices going to fall?
- Is the housing market cooling down, and are prices going to rise again?
- Housing market 2022
What is the solution for the overheated housing market?
The first blog I wrote in January 2022 was ‘What is the solution for the overheated housing market?’. I said that the biggest problem was affordability. Because interest rates were so low and there was so much capital in the housing market, prices just kept on rising. With price rises of 25% a year, there seemed to be no end in sight. I also gave the not-so-popular solution that if interest rates rose, supply and demand would come into better balance. At that point I didn't yet realise that interest rates would rise so enormously. Still, in January I was already noticing some caution creeping into the market. If you look at the capital market rate, you can see that interest rates have risen at a rapid pace since the end of December last year. From a negative rate to a sizeable positive one.
What does the war in Ukraine mean for the housing market?
In February I wrote the blog: ‘What does the war in Ukraine mean for the housing market?’ Uncertainty increased. Inflation was enormous, our energy costs rose massively because of the sanctions and mortgage rates rose sharply. But our net migration also increased. We're dealing with strong population growth. Our building costs are rising, and in general our whole life is becoming a lot more expensive. I wrote that I thought you'd do best to take advantage of the low interest rates, and that because of inflation, rising costs and the shortage of homes you'd be best off buying quickly. I still stand by that. House prices may have fallen by 9%. But total monthly costs have risen by 50%. At the moment you're paying about 150% of the monthly costs for the same mortgage amount as in January 2022. You could say that prices haven't actually fallen, but risen. We're paying even more per month for our homes. But you can't put it quite so black and white. Many homeowners are still taking their low interest rate with them, and there are plenty of people with sizeable home equity. For first-time buyers, though, homes have become much more expensive. Our consumer confidence is historically low at the moment. Consumer confidence in December 2022 was -59. The year before it was -19.
We live too large
In February I also wrote that we massively live too large. I wrote that on average we lived on 65 m². That's really very large. There's recently been a recalculation. At the moment in the Netherlands we live on 53 m² on average. Even so, we still live larger than most other Europeans. That's quite remarkable, given that we're such a densely populated country. We have relatively many single-person households, and we'd all ideally like to live in a family home with a front and back garden. In Utrecht, for example, 11,500 people are looking for a house and only 6,700 people for an apartment. In Utrecht, 43% of the total housing stock is family homes and 57% apartments. So demand for a house is much greater. We'd rather not live in an apartment, and certainly not in a big tall residential tower. Whereas in many cultures this is completely normal, and living high up in a tower carries enormous prestige.
Mortgage rates are rising: what does that mean for you?
In March we wrote about rising mortgage rates. Mortgage rates have risen considerably and have also fallen again very slightly. It's the capital market rate in particular that has risen enormously. As a result, you see that far fewer mortgages have been taken out. Because of the higher rates, refinancing a mortgage is less attractive, and you see that people who already have a mortgage are now choosing to take it with them to their new home.
Mortgage rates from Brainbay
Is it a good time to buy a house?
In April I wrote: ‘Is it a good time to buy a house?’ In April there were still about 28,000 searchers. At the moment there are about 18,000. So there are about 10,000 searchers who don't think now is a good time to buy a house. At the time there were 345 homes available, including new builds. Today there are 900 homes available, including new builds. So we have fewer searchers and more supply. The pressure has eased. Prices have fallen, but you pay more per month. I said it before: it's now relatively more expensive per month. But with all of Hugo's plans we're going to run into really big problems. So can you get onto the housing market now? Then I'd do it. Don't see it only as a speculative investment; look at a house as a home again. And also realise that before long we'll be even more homes short, and then it'll be even harder to buy a house. Especially if you'd like a house with a front and back garden.
Are house prices going to fall?
In May I wrote a blog: ‘Are house prices going to fall?’. This was my conclusion: ‘It's not that smart to wait until a home has become worth less. Per month, that home, which in absolute figures may be worth just a little ‘less’, has actually become more expensive. On top of that, prices (almost) always rise faster than they fall. By buying you pay off your loan and you're protected against high inflation. In the long term, property always increases in value. Finally, you pay off your loan when you buy a house. The higher the interest rate, the less you pay off. Relatively speaking, interest rates are currently still historically low. So if I were you, I'd make the most of the breeze and buy a lovely new home as soon as possible!’ Prices rose by about 20% a year, but the value of homes in Utrecht has now fallen by 9%. So the fall is slower than the rise.
Is the housing market cooling down, and are prices going to rise again?
At the beginning of August I wrote the blog: ‘Is the housing market cooling down?’ and at the end of August I wrote: ‘Are house prices going to rise again?’ Every year the housing market goes quiet during the summer holidays. People are busy with other things than buying houses. They daydream on holiday in Ibiza, are busy packing the caravan or are relaxing on a terrace. After the holidays it's just like the new year: time for a fresh start. The end of August and beginning of September are always a bit busier. You also saw interest rates fall slightly. This gave the housing market a small boost.
Housing market 2022
In November I wrote a blog about the housing market in 2022. What a year. How erratic it was. In the blog I made no secret of what I think of Hugo de Jonge's policy. This is really going to be a huge disaster for the housing market. I spoke to a seller who researches building permits. He said exactly what everyone is shouting and pointing out, but what they apparently don't realise in The Hague. Far too few permits are being issued to meet the house-building targets. It's going to be a disaster. Building costs are rising, we're dealing with the nitrogen policy, we have too few staff and investors aren't building. For investors it's currently too expensive to build. They have to put extra money into the development. The rent doesn't cover the costs, let alone make the return technically attractive.
Housing market 2023
What will the coming year bring us? I'm curious. Personally, I certainly hope it'll be a better year. I've had to work from bed more than I'd like, because of the ACNES syndrome I have, which keeps coming back. But business-wise I'm looking ahead with optimism. Last year was erratic. People bought at high prices, got into a squeeze when selling their home, and that brought a lot of stress. The nice thing, though: sellers started to see our added value. We put a good marketing strategy in place and gave houses complete makeovers. People kept a tight hold on their purse strings. Life became so expensive and everyone wanted to wait and see what all those price rises really meant for them and which way the housing market would go.
We're seeing a slight increase in the number of searchers. The number of buying clients is also rising again for us. People simply want a lovely home to buy, to take steps and make plans. After years of coronavirus measures and a not very positive 2022, people want to move forward. Buying a new home and selling your own home happen in the same cycle. That creates balance. As a buyer, you have time again. You can think things over, make plans, consult experts and really feel whether the house suits you. To be honest, I secretly quite enjoy it. Thinking carefully about how best to market a home. Bringing a car full of things to give the home extra atmosphere. But also surprising buying clients with homes they hadn't considered themselves. I'm looking ahead to 2023 positively. I expect interest rates to remain stable. Sometimes they'll fall slightly and then rise a little again. We're getting the market we've been longing for. Only it turns out that homes are still horribly expensive and your wishes are still €100,000 over budget. That's something of all times, and it will stay that way. But we have more time to think.
