Is this the right time to buy a property?

Are you looking to buy a home in the Netherlands? Spoiler alert: the perfect time doesn't exist! Read more to find out why.

"Is this the right time to buy a property?" You may think this is a typical question I get nowadays as a real estate agent, because the housing market is so overheated. Nothing could be further from the truth - as an estate agent, I get this question all the time!

Buyers are always a little insecure and that is very understandable. They are about to spend the largest amount of money of their lives; it is not surprising that this makes them nervous. Buyers are not only uncertain about the possible purchase price, but also about what the market will do in the future and what will happen to the mortgage interest rate.

In a rising market, buyers fear that they will buy at the top of the market and by the time they sell their home again, it will be worth less. On the other hand, when house prices are low, mortgage rates are often high, and then buyers are afraid that they are borrowing at too high an interest rate.

So, you see that in every market there are uncertainties. Unfortunately, I don't have a crystal ball to predict the future, which means it is really an impossible question to answer. What I can do is look at the current situation of the buyer and the possible risks of buying a home. Of course, you want this risk to be as small as possible, but buying a home is not without risk. You may take a loss when you sell, but it may also be the case that you make a profit.

Renting vs buying

Recent research by the ABN AMRO bank among tenants in the free sector shows that 40 percent of these tenants would rather buy than rent. The problem is that a large proportion of these dissatisfied residents earn too much for social housing but too little to get a mortgage. This means that they generally pay high rents.

A lot of expats are in the same position. It’s often cheaper for them to buy a home, but unfortunately no bank is willing to grant them a mortgage. A frustrating situation for young professional singles, who must therefore pay high rents and have little opportunity to save money.

When purchasing a home in the Netherlands, the bank is prepared to finance the appraised value and the buyer will have to pay the additional costs themselves. In many countries, this amount is much lower. Perhaps this is the opportunity for you to buy a home, which may not be possible in your own country.

The buyer's costs concern the 2 percent transfer tax, the notary costs, and you may possibly incur costs for the buying estate agent. In addition, it may be the case that in this overbidding market, you will be outbid, and this amount will also have to be paid from your own resources. So, as a starter, you should have enough savings if you want to buy. If you have these resources, your monthly living costs can be reduced.

With the current mortgages, you will immediately repay a part of your debt. This is your protection for the future, in case you sell the property at a loss. If you sell the house with a profit in due course, this full amount is for you! You do not have to pay capital gains tax on it as in various other countries.

If you, as an expat, plan to stay here for three to five years, buying often turns out to be a cheaper option.

Forecast housing market

According to Rabobank's latest forecast, house prices are expected to be 10.9 percent higher this year than last year. The increase continues and this is the largest price increase in the past two years. This is due to the very low number of homes for sale and the short turnaround time. Another important factor is that interest rates are historically low.

If you see a nice property, you must make an appointment for a viewing the same day, because otherwise you will simply be too late. Estate agents reserve a number of viewing moments and if they are full, you are out of luck and you can no longer view the property.

I find that homebuyers now bid even more aggressively because they have the feeling of FOMO (fear of missing out). Often, they have already seen many homes, made various bids and they still have not been able to purchase their new home. They are then prepared to offer an extra high purchase price.

Since there is a shortage of around 350.000 homes in the Netherlands, it is not expected that this shortage will be solved in the short term. The construction of houses is slow due to the many rules that apply and the shortage of builders. The population will continue to grow and there will be relatively more single-person households. This means that the current housing shortage will increase further in the next 10 years.

As long as the supply is lower than the demand, it is not very likely that prices will drop. Only external factors could cause house prices to fall. These may include changes in purchasing power, government tax decisions, or other political or economic changes.

Your perfect time to buy a property

As you can see, there is never the perfect time to buy a house. It's more about looking at your personal matters. What does your future look like? What are your plans? In addition, you will have to determine how long you think you will stay here. If that is more than three years, make an appointment with an independent mortgage advisor to determine your financial options. Realise that you also need to bring savings with you to pay the extra costs.

If you know the mortgage amount, you can approach a purchase broker to help you. It is precisely in this overstrained market that a broker can advise you on what a realistic purchase price is and secure the deal. After all, they have access to the data of the housing market. In addition, you will be taken more seriously by the sales agent. And lastly, be patient! Good luck with realising your Dutch housing dream!