Recent economic data appears to indicate that the Dutch economy will be pushed into a recession by the consequential impact of the COVID-19 coronavirus. 

There has been a direct and disruptive impact on the Dutch housing market in three primary respects.  First, the crisis has created and will continue to create uncertainty about work and income; this, in turn, will make potential buyers more reserved about taking a step on the housing market.  These effects could (at least temporarily, in our view) lead to fewer sales and, due to a smaller number of offers, also lead to less upward price pressure.  Second, whilst there has not been a full lock down in the Netherlands like in some other European countries (viewing homes for sale, for example, is still permitted), clearly the measures taken to control the spread of the new virus do make such activities more difficult.  Further, closed schools and day-care centres, mean it is problematic for potential buyers to go out.  Similarly, the call to work from home as much as possible and social distancing requirements have impacted sellers to stop accepting viewings.

The impact of uncertainty about work and income may apply some downward pressure on house prices; whilst this could be good news for first time buyers, it unfortunately is likely to be the flexible/fixed-term labour pool (and predominantly young workforce) that are likely to be most negatively impacted. 

Whilst the full extent of the current crisis has not yet been realised, it is not an entirely pessimistic outlook.  For example, the Dutch real estate agents’ association, NVM, has indicated that whilst slightly fewer homes having been changing hands, prices appear to be broadly similar to last month.  Whilst a decline in prices in the housing market whilst such disruptive economic downturns prevail are not uncommon, in the Netherlands they have generally been relatively short-lived, except for the 2008 financial crisis.  However, it is important to note that the current situation is different from 2008, since the 2008 crisis started in the financial sector and immediately led to a credit crunch: there was suddenly hardly supply or demand for credit, which consequently fed into the entire economy.  The present crisis on the other hand, started in the real economy, with numerous companies worldwide shutting down to contain the virus. Currently, there does not appear to be a credit crunch with difficulties for homebuyers to get mortgages.

The partial reopening of Dutch primary schools and childcare centres on the 11 May, should ease some of the pressures associated with viewings (and many real estate agents are already offering ‘corona compliant’ viewings for available properties).    

Dutch lenders prudent mortgage lending criteria (adopted to avoid falling into the same pitfalls arising from the 2008 financial crisis) and the pre-COVID-19 crisis shortage of available Dutch housing stock are likely to mean minimal long-term impacts.  Aerona Real Estate expect the COVID-19 outbreak to have a negative though relatively short-term impact on the Dutch real estate market, with the impact being minimal in the long-term.