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IMF: Gloomy forecasts about house prices could damage Dutch housing market

IMF: Gloomy forecasts about house prices could damage Dutch housing market

11 April 2023, by Victoria Séveno

Talking to ANP, Paul Hilbers - an Executive Director of the International Monetary Fund (IMF) - warned that the gloomy forecasts that predicted significant decreases in house prices in the Netherlands will only serve to damage the Dutch housing market. 

Forecasts predict house prices in the Netherlands will fall in 2023

Over the past several months, various banks and organisations have published reports stating that the cost of buying a house in the Netherlands would fall in 2023. In February, ABN AMRO predicted that house prices would fall by 6 percent this year - a notably higher figure than the 2,5 percent drop the bank had initially expected. 

These forecasts have been supported by the most recent figures from Statistics Netherlands (CBS) and various housing associations; back in January, real estate association NVM reported that house prices had experienced the first year-on-year decrease in nine years. 

At the beginning of April, NVM revealed that, for the first time in four years, people in the Netherlands were actually paying slightly less than the listed price for residential properties. On average, buyers paid 1,3 percent less than the asking price, marking an end to the period of overbidding the Netherlands has seen in recent years.

Economists warn of a self-fulfilling prophecy

While these figures have inspired hope in many prospective homeowners, a representative from the IMF has warned that they could damage the future of the Dutch housing market. Talking to ANP, Hilbers explained that informing people that house prices will fall could lead to people adjusting their expectations and automatically assuming that house prices will continue to fall. 

“Economists call this adaptive expectations,” Hilbers said, adding that it was dangerous to base major financial decisions - such as buying property - on these forecasts and reports, as it could lead to a self-fulfilling prophecy where house prices fall purely because people expect them to. 

In spite of this warning, Hilbers said he was “not overly concerned” about the recent fall in prices, but the IMF Executive Director refused to share any of his own predictions for the future of the Dutch housing market. He did, however, say that he expected the recent trend of falling prices was unlikely to last: “That tightness on the supply side will put a brake on the fall in prices at some point."

Thumb: suehling via Shutterstock.com.

Victoria Séveno

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Victoria Séveno

Victoria grew up in Amsterdam, before moving to the UK to study English and Related Literature at the University of York and completing her NCTJ course at the Press Association...

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tachionxx 19:30 | 22 May 2023

House market in NL has always been substantially artificially doped by several factors such as the restriction to build, the restriction to allow new land to build, the attraction of new students and workers from abroad and the advertisement methods that the Real-estate National Association was using keeping the "VERKOCHT" label on houses for months just to push the sensation that houses were sold as fast as bread, creating a rush to buy. A media technique that indeed worked, with outrageous overbidding! All of this together with low interest rate, extremely risky 110% mortgage rate, high rental prices and an overall advertisement to many conferences and exhibitions on how is cool to study in the Netherlands. The reality is that houses in NL are pretty hold, badly kept and badly built, with poor materials. Many of them have asbestos problems, old water pipes, thin walls, low energy label and weak foundation just to name a few. Their really low quality makes the absurd high prices a real scam and a clear inflated bubbles, that for some reason is kept artificially inflated...for the moment. At the same time, despite what Dutch inhabitants may think after years and years of brain wash on TV and newpapers, Netherlands is not really a nice country to live in. Neither in term of food, culture, weather and attractions, nor in term of social environment and interactions. Most of the expats that are supporting the real technological development of the country, are here mainly for the work opportunities and the good salaries, and will be ready to leave as soon as better opportunities will arise, leaving empty houses behind them. The Dutch system could guarantee the actual status due to both a reasonable organization but also thanks to substantial cuts to the social assistance like the private healthcare that is draining about 17B EUR annually from the pockets of people, low pension build-up for employees, and their unfair fiscal dumping, tax ruling and royalties fraud , that since 2000 has unfairly drained about 2000 B EUR annually, annually, from the taxation system of the other European partners !! When more fair European communitarian rules will allow other countries to adopt the same or a similar taxation for companies as in NL, when salaries will be updated in the rest of Europe to a more equal level and when people will realize that there are actually much nicer place to live, then the Dutch house market bubble will definitely collapse. The actual increasing interest rate and the high prices partially not cover by Nationale hypotheek garantie will already put buyers and households at risk now, despite the artificially doped system. A house with a real value of 190k is sold today at 450k EUR, with an interest rate of about 5% (that is almost 100% in 20 years), this house is actually paid around 900k EUR in 20 years !!! This is absurd and cannot last forever. It will collapse, I am sure. It will take some more years I guess, but it will happen and it will be a just disaster.