Tuesday, 27 October, 2020

Being able to loan more is not a solution for starters

According to Bank, more money to borrow for starters does not solve the problems in the housing market. There is already talk about a broadening of the loan standards. But that will not improve the affordability of starter homes.

This will bring Bank (the budget information institute) to a roundtable discussion during a number of days and in that of the general committee for Housing and the Central Government Agency. Bank will propose to allocate just a portion of the housing stock exclusively for starters.

Distinction between singles and two-earners

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The institute (Bank) makes a distinction between two-income households and singles in order to clarify the problems on the housing market for starters. For example, two-income households from whom both partners earn a minimum wage can now take out a mortgage of 175,000 euros at an interest rate of 2 percent. For such sums, enough houses in the Netherlands are for sale.

Update: Two earners can borrow 170% for their new home.

Starters have a strong preference for renting

Many starters have a strong preference for renting above buying a house, according to Bank. These people are more or less forced to buy, because too few affordable rental properties are available. According to Bank, buying a house at a young age is normal in the Netherlands. It is a culture-based custom. This is precisely why house prices in the Netherlands are rising for cheaper homes.

Broadening loan rules is of little use since people already have money left

An expansion of the loan standards for starters does not make much sense, according to Bank. They note that the majority of tenants with a low income already have money left. In this case they are talking about incomes of two-income households up to a maximum of 35,000 per year.

More affordable rental housing as a solution for too high house prices

The solution is simple according to Bank. For example, there are many more affordable rental properties in the big cities. For example, starters are not obliged to buy their own home and there is more supply for the other group (the people who do want to buy a house). More supply and less demand, which irrevocably leads to lower house prices.


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