‘Tinkering with the housing market is a waste of time’

The government should stop its efforts to try to reanimate the housing sector and let the market recover under its own steam, a number of experts say in Friday’s Financieele Dagblad.

The cabinet is working on several ideas which will be presented to the public in September, along side the 2014 budget. These include allowing home owners to use life insurance policies to pay off part of their mortgages.

But such ideas are pretty much a waste of time, Rabobank economist Paul de Vries said. ‘Young people who bought a house five years ago and are now in negative equity are the real problem,’ he told the FD.

Surplus value

Older people, with a lot of surplus value in their properties are most likely to have considerable capital in pension schemes, he pointed out.

Amsterdam University professor Roel Beetsma said house prices are already falling less quickly than they were. ‘There comes a point when first time buyers can afford a home,’ he said.

Groningen University professor Flip de Kam said the housing market is very sensitive to confidence issues. The government’s decision to cut the transaction tax from 6% to 2% had not boost sales significantly, he pointed out.

The recovery may still take several years because ‘sellers still think they can get a high price for their house,’ he told the paper.

The average house sale price in the Netherlands has fallen some 20% since the beginning of the economic crisis. Tens of thousands of home owners are now in negative equity, meaning they paid more for their home than it is worth.

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