A tipping point in the housing market due to the war in Ukraine? “I don’t notice it at all,” sighs pregnant Simone van Duin (30), who is looking for a house with a garden in Hoofddorp with her boyfriend. Four bids, all above the asking price, zero times success.
“Within a year, prices have risen so much further,” says Duin. “You now pay a hundred and a half more for the same house.” While the monthly payments for a mortgage are now also higher, due to the increased interest. “As a result, we think four times with every offer: do we really want to offer this amount for this house?”
There is indeed no question of a ‘tipping point’, brokers say to NRC† But the overheating, overheating of the market, according to them, is decreasing somewhat. The economic situation is more uncertain: energy bills are high, a full car tank is expensive. Consumer confidence is at its lowest level since 2013, and mortgage interest rates are rising rapidly.
“People have become more reserved,” sees Gyvan Pooters of Pooters Makelaardij in Maastricht and Valkenburg. “There are fewer bids and people cancel a viewing more often. They schedule such an appointment quickly, because they are afraid that they will no longer be able to intervene. But then they put everything back together at home and conclude: it doesn’t fit financially after all.”
“I think that sentiment is adjusting,” says Robert van Oossanen, real estate agent in Amersfoort and chairman of the regional branch of the NVM. “Viewers no longer feel that they have to bid above the asking price. It still happens, but less often. And where previously there were easily thirty to forty viewers for a home, there are now twenty to thirty. So there are fewer of them, but still a lot.”
More demand than supply
The Dutch Association of Real Estate Agents (NVM) will present its latest figures on the housing market on Thursday. A really big kink due to the war will not be visible in that. Partly because it’s too early for that – the invasion of Ukraine was at the end of February, the figures are for the first quarter of this year. But a huge cooling of the market is not expected either: there is still much more demand than supply.
“We are still in a very luxurious position,” says Pooters. “A home may no longer be sold in the first viewing round, but we are still selling well.”
Sven Heinen, real estate agent in Amsterdam South, has just come from a viewing of a 72 square meter home with single glazing. Asking price: 6.5 tons. “There were just forty or fifty people there,” he says. “Maybe it’s less people, but people still want to pay the top prize.” Yet he also sees ‘the first contours of a market that is somewhat less spectacular’. “The first two months went like a spear, in March I saw a change. Fewer viewings. And I notice it with buildings of more than a million: people are a bit more critical there.”
Also read: Are a million homes needed? It can also be less, or more
“Everything has to do with scarcity,” Jerry Wijnen, chairman of the NVM Amsterdam region, summarizes the situation. “Suppose you are an economist and you sit at a table with all kinds of buttons that you can turn, such as consumer confidence and purchasing power. Then you would think that something has to be done with house prices now. But we don’t see that yet. Scarcity is the disruptive element in market forces. If fewer people want to buy, there are still plenty of people who do. In addition, interest rates have risen, but are still historically low. Money is still cheap.”
a lot of uncertainty
Rabobank also does not expect the war in Ukraine to lead to an immediate turnaround. In order to go from large price increases to falling prices in one go, a very large economic shock is required, says housing market economist Stefan Groot. The war in Ukraine does not cause such a thing. For the time being: there could be a deep recession. Or the gas tap is turned off, causing inflation to rise even further, and purchasing power decreases even more. “Many scenarios are conceivable,” says Groot. “War makes uncertainty great.”
But for now, the bank thinks – like other banks – that the market will only cool slightly. That was the expectation before the war. “The main forces behind the enormous price increases are shrinking,” explains Groot. “We have been hearing for some time about a declining number of viewings, interest rates are no longer falling and economic growth is leveling off. But: the shortages are still large and new construction is lagging behind. And unemployment is historically low. We therefore expect that prices will not fall, but will rise less rapidly.” That still means an expected price increase of 17 percent. “So very high,” says Groot.
Pessimism among starters
Starters therefore notice little of a cooled market. Mortgage lender Viisi last week surveyed more than a thousand people between the ages of 22 and 35 who want to buy their first home; only one in five expects to succeed within a year. A quarter earlier, that was still a quarter.
Contemporaries with owner-occupied homes are also pessimistic. Steven Klusener (30) lives with his girlfriend in a 56 square meter owner-occupied house in Amsterdam. Since he bought it in 2018, it has risen sharply in value. “That puts me in a favorable position compared to peers,” he says. But he doesn’t feel like a fat buyer. “If I want to move, it will be to a bigger house, and that now costs around a million euros. I see that appreciation in value as a huge problem for anyone of my generation who, for example, wants to start a family one day,” he says.
He and his girlfriend keep a close eye on Funda. There they saw a nice, cute house in Baambrugge two weeks ago. The same day they called the broker, who said: you are much too late, you are on the reserve list. “You actually say to that broker: here I am with a large bag of money, but even then you are not taken seriously at all.”
By visiting the current owners, who found their interest “super fun”, they still got an appointment from a sulking broker.
Just like, they later learned, sixty other interested people. “So we didn’t go into it any further. To me, that indicates that the housing market has not cooled down at all.”
A version of this article also appeared in NRC on the morning of April 7, 2022