The impact of higher mortgage rates on home prices and the number of transactions will not be reflected until the third quarter of this year at the earliest. That’s what the Land Registry says in a quarterly report on Wednesday. Kadaster expects the housing market to be less active in the near future, resulting in less sharp price increases.
Mortgage interest rates have risen sharply this year. Where the interest rate on short- and long-term mortgages was between 1 and 1.5 percent in January, it was around 3.8 to 4.5 percent in July.
A significantly higher interest rate will have consequences for the housing market. The Land Registry Office expects a rate hike to push the housing market brake pedal even more. The number of transactions will decrease, resulting in smaller price increases. Kadaster believes that this effect will be visible “as soon as possible” in the third quarter.
High mortgage rates are not the only thing slowing down the housing market. The Land Registry also believes that high inflation and the traditional economic law of supply and demand will play a role. According to the Land Registry, “At a certain point, house prices are so high that fewer and fewer people are able to buy a house. As a result, the number of transactions decreases, after which the price increase also declines.”
House prices have risen less quickly than before for a number of months, even though a house still cost an average of €429,000 in the second quarter. This is 17 percent more than the same period last year. The number of deals between April and June was the lowest in any other second quarter since 2015.
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