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ABN AMRO 2020 forecast: House prices up 4%

Published on 14-01-2020
House prices are going to rise less rapidly, according to the Economic Bureau of ABN AMRO. After an increase of 7% in 2019, prices in 2020 'only' increase by 4%. According to Bokeloh, the lack of homes offered for sale and the historically low mortgage interest rate is pushing up house prices even further.
Philip Bokeloh, economist at ABN AMRO: "The housing market will receive less support from the economy next year. We think GDP growth will be reduced to 1%. In addition, stricter lending standards will put a brake on price rises. Although second income is more important from now on , families may borrow less based on their income. "

According to Bokeloh, the lack of homes for sale also boosts house prices. "Home buyers have little choice. The supply of houses is very scarce, especially in the low price segment." The historically low mortgage interest rate will also contribute to the price increase, according to Bokeloh. "If the US and European central banks lower their interest rates - what we expect - then the mortgage interest rates could possibly fall even further."
Stricter environmental rules hinder transactions
  The slowdown in world trade is putting a brake on economic growth. In addition, the economy is being hampered by the stricter environmental requirements. Construction is relatively affected by this. Bokeloh: "The number of permits issued has fallen dramatically in the past year. As a result, fewer new homes will be delivered and the target number of 75,000 new homes per year will remain out of reach."

The lack of opportunities to move on to a new home will result in fewer home purchases. Bokeloh believes that the number of transactions will fall by 5% in 2020. He suspects that this will have an effect on making the housing stock more sustainable. "The move is a suitable time to implement large-scale home improvements."
New construction hardest riser
New-build homes are rising significantly faster in price than existing homes. In the second quarter of 019, the price increase amounted to 16% year-on-year, against 7.2% for existing homes. The price increases are among other things caused by a lack of supply. Although the order book is still well filled, the Economic Bureau of ABN AMRO takes into account that production will shrink in 2020. In addition, the higher price increase is related to the increased construction costs and the changed composition of the completed homes. There will be more new homes in regions where there is a shortage and prices are on average higher. Moreover, the completed homes are on average larger than before.