“If homes have been on sale for some time, you can often successfully drop below the asking price”: Real estate experts on the housing market

Economists expect a (slight) decline in house prices. Contractors are worried about their order books now that the new construction market has come to a standstill since borrowing has become more expensive. Does this provide options for the buyer or the builder? Economist Wouter Thierry and other real estate experts shed light on these questions.

The new construction market has come to a standstill since it has become more expensive to borrow. Meanwhile, the government is debating whether to extend the reduced VAT rate for demolition and reconstruction. There is also uncertainty for those considering renewal: Will VAT remain at 6 percent or 9 percent?

“Such weather policies push consumers and construction companies into a state of uncertainty,” says the Bouwunie construction union. Since committing to renovate, the real estate agent has been puzzled by several old, unsaleable, energy-guzzling homes. Meanwhile, the client wonders: Will house prices really fall? In short: the real estate sector is going through a difficult stage.

But every crisis provides opportunities. this too? Economists at ING expect house prices to fall by 3 percent on average this fall before cautiously rebounding in 2024. “Paying wages and extending loan terms have supported the property market so far, but not enough to offset the increase.” in interest rates.

According to economist Wouter Thierry, much longer sales periods indicate a shift in prices. A potential uptick in interest rates will also put additional pressure on demand.

So the question is: is it time to buy now or is it better to wait a little longer? First and foremost, house prices and interest rates balance each other like connected ships, explains Terry. Therefore, lower prices are associated with higher long-term interest rates, and vice versa.

“So I think that when you as a buyer feel ready to take that step, it is always interesting to buy. In this case you should not wait for better conditions that may never arise.

Back from negotiations

According to Terry, the macroeconomic situation also gives potential buyers an asset they have not been able to even consider in recent years: negotiation. Where there have been bids, there is now scope for price negotiation again. A seller’s market is gradually turning into a buyer’s market again, as the asking price is no longer the selling price.

“Certainly for properties that have been on sale for some time, you as a buyer can try to lower the asking price. Often times successfully, especially in buildings that are within a renovation obligation,” Terry says.

For such dilapidated homes, you have to take into account significant renovation costs. However, according to the economist, such a purchase could be interesting, given the often significant price difference with ready-to-use energy-efficient homes. “This price difference may increase somewhat due to the renewal obligation, as homes with at least an E or F Energy Label must receive a D Label within five years.”

Conclusion: the potential buyer is once again in a stronger position. Although this does not apply to buying building land, its scarcity makes the price high anyway, or a house with an EPC A or B mark.

Good news also for builders and renovators

Are there also opportunities for builders and renovators? “The new construction market is in crisis.” Nico Demeester from the Embild Construction Union does not comment on this matter. “We expect a sharp decline in activities of 5 to 8 percent this year. Since interest rates on home loans have tripled, the new construction market has reached a standstill. There is almost nothing, or at least very little, in new applications. We do not see Any improvement this year as well.”

With renovation work, which usually involves smaller sums, the situation is less dramatic, according to the construction executive. “Although there is hesitation there, too.”

This means that there will be gaps in the planning of the contractor, who may prefer to keep his employees working. “This creates opportunities for the builder, in the sense that the price can be renegotiated,” says Demeester.

Although it immediately adds a nuance: Don’t expect a 5 or 10 percent discount. “Costs have continued to rise for our contractors: bricklaying, carpentry, pipe laying… all manual labor. And as you know, our wage costs have also gone up because of indexation. The contractor must be given the opportunity to partially account for this. Otherwise he will either tear his pants and it will not be completed business, or simply will not sign the quotation because it is not profitable.

According to Embild, the outcome of negotiations between the contractor and the individual will likely be that the cost increases will not be passed on. “And that actually happens in about half of the cases, because the contractor doesn’t want to lose the contract.”

One way or another, there is room for negotiation again here. “Remember, we are coming from a time when contractors could not promise when they would come and what it would ultimately cost, given the explosion in material prices. Here too, we are now evolving towards a more normal situation. I think the opportunity for clients is that we can now To give them more clarity and certainty regarding price and delivery time.