House prices will fall by 2.5 percent next year, ABN AMRO economists predict in a report on the housing market. This is due to a decline in purchasing power, higher mortgage rates and the economic downturn.
The bank previously assumed an increase of 2.5 percent for next year. “A reversal is visible in the housing market. The number of house purchases is falling, there are more houses for sale and everything indicates that house prices, after years of unprecedented price increases, will fall next year,” ABN AMRO writes.
Market experts predict that house prices in the four major cities will come under more pressure than elsewhere. Although prices will fall slightly nationally, the number of housing transactions will hardly decrease in 2023. ABN AMRO expects only 1 percent fewer homes to change hands than this year.
The bank also believes that the consequences of the price falls for the economy are limited for the time being. This is partly because, according to ABN AMRO, the mortgage interest rate will not rise further than the current level. “The increased housing requirements due to working from home, the persistent housing shortage and the tight labor market also provide a counterbalance to falling house prices,” say the economists.
In addition, homeowners have little trouble with the interest rate rise, because a majority have fixed the mortgage interest for a longer period of time. “In addition, due to the sharp rise in house prices, most homeowners have built up a lot of equity in recent years. In combination with government support to keep energy costs manageable, many families are therefore more resilient than during the credit crisis,” the report states.
During the credit crisis, which lasted from 2008 to 2013, house prices fell sharply and many homeowners found themselves in financial trouble. ABN AMRO now expects that fewer homeowners will be left with a residual debt as a result of the fall in house prices.
Rabobank indicated last month that houses can fall in price to a limited extent in the course of next year. But for the whole of 2023, the bank still assumes a price increase of 3 percent.