Bubble? Bubbles? NAAHHHH...Let's Buy!
"Feel free to buy your new home. Do not worry if you pay a few thousand Euro more than expected. We are not in a house bubble." Statements made by the director of our Dutch Central Planning Agency, an independent agency closely looking at our economy and advising our politicians. She recognises the sharp rise in house prices in various cities, not 10%, not 20%, but more like 50% to 80%: "The cause could be the migration from the countryside to the city. After all, outside the economical area of the Netherlands (the Randstad), the house prices rise much slower."
Although she is correct in that house prices outside the Randstad did not rise that much in last couple of years; to be able to buy a roof over our head in a city like Amsterdam, or Utrecht, one must earn more than two to three times the average income in the Netherlands.
Klaas Knot, the president of our Dutch Central Bank, recently stated something similar: "The housing market is relatively healthy." Knot makes a comparison with the late nineties. In those times, the total mortgage increased with about 16 percent; today this is only with 1 percent.
Seriously? Is that the explanation why our housing market is healthy?
© Ingram Pinn (source)
Go to sleep peacefully! Nothing is wrong! Buy the badly maintained apartment of 52 m2 for three to four hundred thousand Euro. Put all your savings together, go to the bank, borrow for 2 percent the maximum amount you can borrow and buy your dream home. Ignore the fact the total mortgage debt has broken the record of 2012, already last year. This amounts to more than 670 billion Euro; Across about 4 million home owners. You can ignore this because it is only 92% of our national income. Interest rates are low and the total value of our homes is 1,650 billion Euro. Interest rates do not rise and house prices do not fall, so come on people: tomorrow the sun is shining again! Everything will be fine!
How can we ever forget our 'government' speech in September 2008: While Lehman Brothers took a fall and the financial crisis in the United States took of like a thunderstorm, our Queen reads the speech of the throne: "Thanks to the efforts of recent years, the Dutch economy is relatively good. Unemployment is low. Since the year 2000, purchasing power per household has risen by an average of 12 percent. Our pension system and other social services are solid." While everyone else's gut feeling was that something was not right, we were kept sweet with multi-interpretable word choices.
We all know what happened not long after this speech: unemployment did rise to record highs, personal bankruptcies left and right, banks saved by nationalisation, implosion of house values, pensions cut down effecting about 50% of our population; Do I need to say more?
That was, however, ten years ago. We learned from the credit crisis! This time it is different! We can pump the bubble much further!
HAPPY HOUSE HUNTING
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@edje I do live in Belgium and do work in the Netherlands. Limburg to be more precise!
Some of my coworkers are house hunting! And a decent house which comes on the market here, is almost instantly sold and in most cases for more than the asking price!
Still buying a house is one of the best investments one can do! Each month it will become more of you and less from the bank. It is in most cased the best retirements funds you can have! As long as you maintain it and keep it up to date!
But when buying a house, some serious calculation needs to be done! When we did buy our house, we did set a max price we could afford and already knew how much per month the loan would cost us!
Cheers,
Peter
Many have the views you have; However, results from the past are not guarenteed for the future. What if the next financial crisis kicks in, one that will be much worse than the last one we had, simply because the ECB does not have any instrument anymore to counter the next crisis (interest rates are already rock bottom)? The next crisis is in the making imho. The financial segment did not learn, the house prices in Randstad, are way to high (ie only affordable for those who earn couple times average salary), the interest rates can only go up. Sure, areas like Limburg, Zeeland and Groningen are still very affordable, question is only, will you ever be able to resell when you want? Most young people move to the Randstad for there study and most of them dont return anymore to where they came from, ie we are getting empty villages.
Well @edje I cannot disagree with your arguments!
We will see a next financial crisis, the only thing we don't know is when it will hit us! And by how hard!
Still we need to take some educated gambles in life!
One will never know how much the house is worth when you are ready to sell it. Just like I will never know what my retirement income will be, until I get it!
Agree, one does not have a crystal ball :)
Seriously, one of the most frustrating thing for me is that basic human needs are not very basic anymore, They have gone to luxury purchasing. Now, to buy a home or a good meal takes you forever even with a lot of loan from banks and every member of family earning. What has happened to our world. These monster capitalists people never get to their fill? What a shame
Result of freedom I'm afraid.
Thats true
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