Did you read it too? Property prices in the Netherlands in the first quarter of 2022 are a bit lower (2.1%) compared to the end of last year*. Surprising? Yes, especially when we have been reading reports of skyrocketing growth for years 🚀.
🕵️♀️ What’s up with that?
First, some perspective: The drop is quite small at 2.1%; and if you compare it with a year earlier, prices are still 13.7% higher. So what could be the explanation:
- Very strong end of 2021: Prices have had a very strong increase at the end of last year, so a small decline in the following quarter is not surprising.
- Less busy: It is not uncommon for prices to fall somewhat in the first quarter, as the housing market is traditionally less crowded.
- Rising mortgage rates: Mortgage rates have risen from 1.5% to 2.5% which is still historically low, but of course it has an impact on how much money buyers can borrow and so it takes some heat out of the market.
🔮 What does the future hold?
Nobody can predict the future, duh 😏! This said, most real estate experts such as NVM and ABN Amro** continue to predict that house prices will rise because the demand for houses is still much greater than the supply. This gap is long-term and structural, and will probably not be closed any time soon, but the rise in mortgage interest rates may make growth a little bit more modest. The latter is a good thing: better to have sustainable growth than overheated growth.
ABN Amro predicts a 12.5% increase for 2022 and a 5% increase for 2023.
🎢 Why still invest in real estate in those volatile times:
In today’s uncertain times with high inflation, falling stock markets and 0% interest on your savings account, it is hard to find the right spot for your money. Real estate has historically proven to be a great alternative in such periods.
- Stable rental income: Real estate offers you a stable source of passive income through rent. Even if property prices go down for a period, you continue to earn quarterly from your investment.
- Inflation-hedge: If there is inflation, the rent will follow suit and so will your rental income.
- Property appreciation is very strong in the long run: If we look at house prices in Amsterdam between 1995 and 2020, they rose by an average of 7.1% per year over the entire period, including two lesser periods of depreciation in 2002-2004 and 2008-2013. So, as Warren Buffett always says: "Invest for the long term!"
With Brxs, we make it very easy to invest in specific real estate starting at €100 and you earn interest through rental income (paid quarterly) and potential appreciation in the longer term 💰.
🏡 Interested to have a try?
- Plan a chat with our team if you still have any questions.