That is a significant adjustment from the 10 percent that the bank still assumed in October 2021. The bank expects house prices to rise by 5 percent next year.
The main reason for the sharp increase is the low mortgage interest rate. Although it will not fall any further, it will not rise either. “This means that house prices could continue to rise,” said Philip Bokeloh, an economist at the bank’s Economics Department.
Due to the low interest rates, it is cheap to borrow money to buy a house, which causes house prices to rise. After all, there are more people hunting for a house. The price-increasing effect of this will be less this year, the bank expects, because interest rates have been so low for some time and this is ‘more and more incorporated in house prices’.
Tight labor market
There is also something else that is causing higher house prices: the shortage on the labor market. The screaming staff shortage in more and more sectors ensures that people who start a new job can negotiate their salary firmly. And more wages mean that they can bid more on a house, which in turn causes prices to rise further.
If the lockdown measures are lifted again, the subsequent economic recovery will push wages even further, Bokeloh expects.
The third cause of the further overheating of the housing market is the enormous shortage of houses for sale. If you go house hunting, you roughly have a choice of one and a half houses, so no choice, according to the bank.
With so much competition, it’s no surprise that buyers go to great lengths to make their mark. Eight out of ten home buyers offer more than the asking price, which only pushes prices up further.
The problems in the housing market are one of the main priorities for the new cabinet, which will start work from Monday 10 January. The bank just has little confidence in the way in which the Rutte IV cabinet wants to tackle the problem.
One of the spearheads is to build 100,000 new rental and owner-occupied homes per year, in order to eliminate the shortage of 1 million homes over a ten-year period. The big question is whether this will succeed, because the personnel shortage also affects the construction industry.
“It remains unclear how a minister can make a difference, because no money has been reserved for extra manpower and it has not been worked out what additional powers the minister will receive,” said Bokeloh.