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.