Does the housing market breathe?

According to the Dutch Real Estate Association (NVM), the first signs of cooling in the housing market are already visible. Even so, it is still too early to celebrate. Rutger from Waltmann Makelaars explains how the interest rate curve in the coming months may give more clarity to people looking to buy a home.

Concerns about interest rates

Interest rates have been rising since the beginning of the year, and that rise is causing some anxiety among potential buyers who are hesitant about whether buying a home is something they want or need to do right now. Meanwhile, sellers are now eager to get their homes on the market quickly.

The combination of these trends seems to be giving the current housing market a bit more strength. Quarterly data does not yet reveal much of the current situation, but realtors have noticed a slight increase in the number of properties available.

Changes in the housing sector

Rising interest rates also have a direct impact on the amount of mortgages people can get, and therefore on the housing sector, where buyers can find properties they can afford. A change in interest rates means that a fed up home suddenly exceeds its budget and becomes a market again.

Declining confidence

People’s confidence in the housing market has fallen even further. Consumers are worried about their financial situation, and rising inflation and rising resource and energy prices have created an even bigger hole in buyers’ budgets. These extra costs are immediately impacting the buyer.

Rising interest rates and high home prices are not contributing positively to our confidence in the housing market. Buyers are staying put because their financial situation is less stable than it used to be. In fact, it mostly reduces the number of viewings and reduces the likelihood of excessive rates.

There hasn’t been a dramatic drop in home prices.

Despite some bubbles in the real estate market, home prices are not expected to fall significantly in the short term. If interest rates stay around 3 percent, they might even continue to rise. However, if interest rates rise to 4 or 5 percent, the situation could change quickly. However, this is a matter of speculation.