Historic labor market tightness, sharply fluctuating stock prices and inflation reaching into the double digits. 2022 has been quite an eventful year economically. But what will 2023 bring us? In this series, Charles Kalshoven, macroeconomist and senior strategist at APG, explains what we can expect in the coming year with respect to our purchasing power, the labor market and investments, among other things. Today part 3: What 2023 will be like for the housing market?
The overheated housing market of recent years tempted RTL to produce the TV program Kopen zonder kijken (Buying Site Unseen). People who had trouble finding a suitable home turned to that program to figure out how to be able to buy their own home. Kalshoven expects that in 2023, it would be better for this format to be changed to a variant where not buyers, but sellers are helped. After all, homes are getting cheaper, giving buyers more to choose from. On the other hand, the cost of living for an owner-occupied home is increasing due to increased interest rates. This makes it (even) more difficult to find a home, especially for first-time buyers.
A cooling housing market follows a set pattern, Kalshoven says. “Realtors first notice that the influx of viewers decreases, but still manage to sell homes at good prices. Then comes a period when houses are for sale for longer, which leads to an increase in supply. This is because sellers have a price in their heads and don’t want to drop it too quickly. The number of transactions then decreases, something you are already seeing. In recent years, potential buyers regularly waived all kinds of requirements, such as an architectural inspection, for fear of missing the boat. That period is over for now.”
Buyers may be getting more critical, but at the same time, mortgage costs are rising. “The rise in interest rates from roughly 1.5 percent at the beginning of this year to 4.5 percent now means that an annuity mortgage becomes almost 50 percent more expensive per month gross. Net, the difference is smaller. First, the lion’s share of monthly payments consisted of repayment. Now the bulk is interest - and you can deduct that from your taxes. In the first year, the net monthly costs are therefore ‘only’ 27 percent higher. But don’t forget that over time, a larger part of your monthly amount will be repayment and a smaller part will be interest. So, in the end, in year 30 - in which you almost only repay – you’ll be paying 50 percent more than before.” According to Kalshoven, falling house prices do not outweigh this: “According to the Central Bureau of Statistics, house prices in October were about 1.5 percent below the peak, the Dutch Association of Realtors saw prices fall by 6 percent in the third quarter. To end up with lower monthly costs, you need a drop of a quarter or more. I don’t see that happening any time soon.”