Crisis bodes grim for Dutch housing market

Crisis bodes grim for Dutch housing market

by Christien van den Brink

English.news.cn   2013-03-15 21:36:28

THE HAGUE, Mar. 15 (Xinhua) — The happily married young couple Petra and Bert live in a suburban area of the fourth biggest city of the Netherlands, Utrecht.

Bert has just signed a long term contract at the ministry of Infrastructure, while Petra holds a part time job. They would be in the perfect position to buy their dream house, and yet, they rent it.

“Jobwise, it is really difficult to predict where we will be in 3, 4 years. We could be sent to other regions by our employers. Or we could even lose our job. This makes it hard to chose a location for our future house. We don’t want to commit to something until we are more financially stable,” Petra said.

Petra and Bert are not the only ones who have opted for renting in the Netherlands. According to figures published by CBS on Friday, 2.9 million dwellings of the 7.1 million households are rented apartments and houses.

Due to a growing incertainty at the job market, flexibility has become the main argument for renting. Renting offers the ability to pick up and leave if you have to take a job in an other region of the Netherlands.

“The reality is, sometimes renting makes more sense. If you do try to sell your home during an economic crisis, you’re at risk for losing money. Besides, when you rent, you don’t have to pay interest or property taxes to the bank,” said Brounen, a professor of real estate economy.

Due to the economic crisis, real estate prices have fallen sharply, meaning that now would be the best moment to buy a house. But it is not as easy as it seems.

Young, well-educated professionals like Petra and Bert are facing difficulties in obtaining a good mortgage at the bank. In 2013, the maximum mortgage that average income families can borrow is 5 percent less than previous years.

“This means that you will spend 30 percent more on monthly costs. Young professionals will now think twice before they buy,” Brounen said.

And because people from all incomes face difficulties in obtaining a mortgage, many house owners cannot sell their property.

Karin Kooijman has been trying to sell her house nearby a natural park, well-located in the heart of the Netherlands since 2009.

“We have even lowered the price with 40.000 euros to 350.000 euros, even though we spent 368.000 euros in the house. But we still we haven’t found anyone interested,” Kooijman said.

But there is hope for people like Karin. In February 2013, the government concluded an agreement with the three opposition parties on the reform of the housing market.

The main agreements included a rent increase for middle and low-income houses, the relaunching the construction sector by cutting value-added tax on home improvements from 21 percent to 6 percent for one year, and to promote first-time buyers’ access to housing by setting up a fund for first-time buyer’s mortgages.

Dutch housing and civil service minister Stef Blok said all these measures would provide an impulse to the housing market.

“The agreement will tackle reducing the number of richer people living in rent-controlled properties and boost the owner-occupier sector,” Blok told local media.

Nevertheless, according to Brounen, the measures are good, but “the timing could be better.”

“In times of crisis it is extremely hard to revalidate yourself,” he said. “This should have happened a long time ago,” Brounen said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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