House prices to fall 6.4% by 2024, central bank says in new forecast

The Dutch central bank said on Monday in its latest economic forecast that Dutch house prices would fall 6.4% between now and the end of 2024.

Nevertheless, there is no real cause for concern, and economists are not expecting a housing crisis like the one a decade ago when hundreds of thousands of homeowners faced negative stocks, the central bank said.

Banks say this is because many homeowners have pegged their interest payments at low rates for an extended period of time, and salaries are rising, allowing buyers to borrow more.

The Dutch Central Bank said it will slip into a slight recession in the coming months due to high inflation and weak global trade, in line with forecasts by other institutions. The central bank said economic growth will reach 4.2% this year due to the coronavirus pandemic, and the economy will grow by 0.8% next year and 1.6% in 2024.

Inflation will remain high at around 5%, although it will ease, partly due to the impact of the energy price cap. Unemployment will remain low and labor shortages will remain a problem in most sectors. Wages are likely to rise by an average of 5% for him in 2023.

consumption power

Government measures to boost spending power, such as energy price caps, will affect the budget deficit, which will rise sharply in 2023.

The central bank should restore budget discipline, but said the government’s finances were not in a “danger zone.” The central bank also called on the government to focus additional support on households at risk of financial distress and limit support to energy-intensive industries.

As long as governments, employers and trade unions work together to ensure that there are enough qualified staff, efforts must also be made to encourage more homes and businesses to become energy efficient. In an alternative scenario, where global trade continues to decline, economic growth would fall by 0.8 percentage points and inflation would remain at about 9%, the bank said.

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