Weak consumer confidence hurting Dutch housing market
May 14, 2012
The first quarter of 2012 goes on record as the worst quarter for the Dutch housing market since the outbreak of the credit crisis in 2008. The number of transactions decreased by 15.6% compared with the previous quarter and the median price of the property sold was down 2.8% compared to the previous quarter.
The decline in sales is being attributed to weak consumer confidence, economic stagnation and proposed unfavorable tax changes for home owners (reduction of tax deductibility of mortgage interests paid) by the government. The uncertainty among consumers is increasing, thereby causing consumers to postpone making him the decision to buy a house.
"Recent figures from the Central Bureau of Statistics shows that confidence has fallen more than anywhere else in Europe in the past year,” said Ger Hukker (pictured), chairman of NVM, the Dutch real estate association
. "The Dutch market is however dominated by uncertainty, declining disposable incomes and a declining borrowing capacity."
Buyers can benefit from the poor market with more homes to choose from; many available at lower prices. NVM chairman Hukker notes that sellers are more willing to adjust the asking price. "The number of adjustments has never been so high. Sellers are beginning to realize that they no longer can get out all the stops. They are also forced to do so by the large supply. These lower prices are positive for the purchasers, who also benefit from slightly lower mortgage rates.”
But not all sellers are willing to lower their price, opting instead to take them off the market. As the supply decreases, more realistic asking prices will come about.
NVM predicted at the beginning of the year that the number of transactions in 2012 would decrease by 5% and that prices would fall by 5%. In the first quarter, traditionally the worst quarter, the number of transactions declined by as much as 15.6%. The NVM expects to see a continued decrease in the number of transactions for the 2nd quarter. The group also predicts that prices will continue to go down, but less rapidly than in the first quarter.
"The housing market has changed from a sellers’ to a hard-buyer market,” says Hukker. House prices are under pressure and more homes are for sale. The buyer is emperor in this market. Sellers would do well to their asking price to adjust to new market conditions."