Forecast of the Amsterdam housing marketCommodities, war and interest rate hike
An uncertain period for almost all markets and sectors, even the housing market is not unscathed. For a while, we heard nothing but infinitely rising house prices. That currently seems to have come to a halt. There are currently many factors influencing the housing market. Scarcity of housing, scarcity of raw materials, political uncertainty, inflation and rising interest rates. How we got to this point and where we stand today can be read in our blog.
Housing market in early 2022
We look back at a lot of changes at the beginning of 2022. For example, the square footage price rose by a whopping 17%. House prices were skyrocketing and demand was increasing. The expectation was that the number of transactions would drop this year because it was simply too expensive to move anymore. Uncertainty reinforced this expectation.
Rising commodity prices weigh heavily
The war in Ukraine has caused commodity prices to rise sharply. Sanctions against Russia prevent them from supplying their products to the EU. The EU gets these raw materials from other countries for more money. And this increase also affects the housing market. Where home remodeling was previously very popular when people sat at home a lot, this trend now seems to have temporarily paused. As a result, people are thinking twice before actually taking steps.
We as real estate agents also experience this in practice. As real estate agents, we see turnkey houses becoming more popular and selling faster.
A rising mortgage rate
In addition to uncertainty regarding the war, there are more factors that play a role in the changing situation in the housing market. Interest rates were very low for a long time, which made it very attractive to take out a mortgage and to buy a house. This had a stimulating effect on the housing market. In particular, on house prices. Currently, mortgage rates are rising with the result that borrowing money is becoming less attractive. Consumer wealth is declining, and along with declining purchasing power, fewer large purchases can be made.
In practice, then, we certainly see this. House prices seem to have come to a halt. However, the market is not standing still. The price per square meter is still rising. Where once houses of 800,000 were easily sold, this is now increasingly difficult because people can borrow less.
Supply rises, demand falls
As real estate agents, we feel that the market is in flux. There also seems to be a change in supply and demand. The demand has been continuously very high, and the supply could not compete with that. Because of all the developments, the demand for a house in Amsterdam seems to be declining. On the other hand, the sale of houses seems to be increasing. There are more houses offered on Funda than usual and also at Amsterdam at home we see an increase in the number of houses offered. How exactly this movement will develop is not yet certain. However, we can share an expectation based on current data, market data and our experience.
How do we as brokers see the future?
Based on our data and the noises in the market, we still expect a slight increase in average home prices this year and still a significant increase in the price per square foot. What is happening in the market now is expected to continue into 2022. Sales of relatively small houses at a high price per square meter and larger houses will remain for sale. With a cautious note, we also dare to say that in 2023 we will see a small stagnation in the price per square meter with the result that the average transaction price will fall.