March 24, 2023

SHSU Houstonian Online

Read all latest news headlines from USA, UK and around the world, get today's breaking news and live updates on politics, elections, business, sports, economy,​ …

Home prices are dropping (severely) in Canada and Australia, so will the Netherlands follow?

Home prices are dropping (severely) in Canada and Australia, so will the Netherlands follow?

Amsterdam hut for a barrel or 8. In recent years, this can hardly be called exceptional. The question is: will home prices rise much more, or is this the case? It was announced last week that people looking for a home are giving more and more choices: something else is for sale.

More supply means that the chance of prices rising or even falling less quickly increases. In some areas there is already stabilization or even a slight decrease, as in Rotterdam. This is not yet the case in most regions.

A decrease of 14 percent

How different it is abroad. We call Canada. Toronto, the country’s largest city, is seeing home prices to collapse† The median price at which a home is sold is now 14 percent lower than it was in February. It seems that prices in the US are no longer rising so fast.

Same picture in Australia. Average home price there for the second month in a row Failed† Finally, we mention New Zealand. Prices there fell 2.3 percent in the last quarter. This is it Biggest drop In 13 years.

Last year it was still craze in other countries and RTL Nieuws made a video about it:

What is the reason for this drop in prices? Keyword: interest. Specifically, the interest accrued for that other keyword: inflation. Because we all know that supermarket shopping cart is getting too expensive, your energy bill may have scared you and some homes are worth a lot.

Inflation is so pervasive that it has become a problem. This is why many national banks are raising interest rates. This makes borrowing money from the bank more expensive. And they pass that on to the companies and people who are their customers.

See also  Cabinet did not say whether Dutch institutions use Pegasus spyware - IT Pro - News

Higher interest on mortgage

If you want to buy a house and knock on the door of the bank, they will ask you for a higher interest on the mortgage. You will then lose more money for the same house, because of that interest. This makes home buying less attractive. Decreased demand, causing lower prices and thus inflation.

The central banks of Canada, the United States, Australia and New Zealand have already raised interest rates more and more than we did in Europe. The European Central Bank is doing so for the first time this month. The interest rate increased by half a percent from -0.5 to -0.25.

This is not the case with Australia, for example. The interest there will be set on. next week the third time It increased to a plus 2.5 percent.

America is moving forward

The US central bank has also gone further than Europe so far. After a number of increases, the interest rate there is now fluctuating around 1.75 per cent. “As a result, we are seeing a downturn in the housing market,” Philip Marie told RTL Nieuws. He is an economist at Rabobank and specializes, among other things, in the US housing market.

“But because interest rates are rising, the United States is heading into a recession. You can usually avoid that by cutting interest rates. But that’s not possible now, because inflation has to be taken out of the economy first.” In other words, they are either curbing inflation or tackling stagnation.

Australian house prices drop 20 percent

This is also a dilemma faced by countries such as Canada, Australia and New Zealand. For now, you see, the option is made to curb inflation. As a result, Australian experts predict interest rates could rise to 3 per cent and the average home price could fall by as much as 20 per cent.

See also  European Union concerned about energy poverty due to high gas prices

Are these countries a good indicator of what lies ahead for the Netherlands? Somehow, Rabobank economist Nick Friselaer told RTL Nieuws. “The aforementioned English-speaking countries have the same type of economy as the Netherlands. With similar regulations and contracts when it comes to the housing market.”

You would expect the Netherlands to face the same fate as the English-speaking countries, but there are also differences. “The interest rate policy in the Netherlands is set by the European Central Bank, which sets the same interest rate for the Netherlands, Germany, Italy and all those other countries. This rate can be useful for Italy, but not for the Netherlands. While in countries like Australia and Canada it can set the rate benefit more specifically for that specific country.”

It is therefore difficult to speculate whether the ECB’s rate hike will actually lead to lower house prices in the Netherlands. Also because it is not clear what will be done with interest in the rest of the year and whether or not unemployment will rise.

‘Prices will remain stagnant in 2023’

Vrieselaar says the following: “In our The latest housing market forecast We assume that mortgage interest rates may fall again later this year and that unemployment will rise to a limited extent. In this case, we believe that home prices will rise first, but will remain stagnant in 2023. But if interest rates remain high or rise and unemployment increases sharply, we (strongly) assume lower prices.”

Then the word that no one is waiting for: the housing crisis. This is not excluded. “Once home prices start to fall, a lot of people are going to wait to buy,” says Friselaer. “As a result, prices will fall even faster. This carries the risks of a housing market crash.”

See also  Flashing lights or even a power outage: A full power grid, warns Aleander

Don’t make the housing market too big

“This collapse can then radiate to the rest of the economy. People then have less confidence and less willingness to spend money. That is why it is so important that policy makers do not use the housing market too much to create wealth. The risk of contagion to the real economy.”

The most positive note

Not everything is gloomy and gloomy. Earlier in the article, the forecast of an Australian expert was discussed. He said home prices could fall by as much as 20 per cent. But is 20 percent really a big number?

Nick Friselaer: “In 2008, at the start of the Great Economic Crisis, the average house price in the Netherlands fell by about 21 percent. With that, it’s back to the level it was six years ago. If home prices are now down by that percentage, then we’re back to the level of January of last year.

“This shows how much prices have exploded in recent years. A drop of about 20 percent can therefore be called a healthy correction. Moreover, beginners will not grieve for it.”