Dutch facing property price slump of 30%

BAM says that it expects average house prices to fall another 10 to 15%, taking them to levels similar to those in debt stricken Spain and down 30% since their peak in 2008. ‘In our models, we are now counting on further price drops in 2012 and 2013, in total to a 25 to 30% drop. That’s about the level of Spain and I would think that would take us to somewhere near the bottom,’ said BAM chief executive Nico de Vries. Having previously forecast the Dutch market would hit bottom in the second quarter of 2012, BAM now says there is unlikely to be a rebound before 2014 or 2015. ‘From 2015 on, we’ll see a slow inflation linked rise in the housing market,’ De Vries told reporters. Most Dutch banks and economists have said they expect prices in the Netherlands, an European Union member with a triple A debt rating, to reach a low this year before stabilising in 2013. BAM posted a net loss of €251 million for the first half of 2012 after a net profit of €66 million a year earlier. Analysts polled by Reuters had expected a net profit of about €95 million. BAM said it had written off a quarter of the value its Dutch land holdings and real estate development projects, from €1.49 billion to €1.27 billion, due to the worsening outlook. ‘BAM now expects future property developments to be later in terms of timing, fewer in terms of homes per development and lower in terms of average selling prices,’ it said in a statement. ‘The markets for both existing home sales and new home construction are frozen. That’s a concern,’ De Vries added. The country, by some measures, has the highest per capita mortgage debt of all 27 European Union members at 105% of gross domestic product (GDP). By 2013, nearly a quarter of households will have negative equity, mortgage lender ING said earlier this month.