First-time buyers rate their chances in housing market higher

Algemeen Dagblad
Erasmus School of Economics

In an AD article, Matthijs Korevaar, Assistant Professor in Finance, Real Estate and Economic History at Erasmus School of Economics, offers insight into the shifts for first-time buyers in the housing market. 

The supply on the housing market is increasing, houses are taking longer to sell, investors cannot buy up houses as quickly and people can take out higher mortgages. All reasons for first-time buyers to view their position on the housing market in a rosier light. Korevaar: '[W]hen house prices start to fall further, which is quite conceivable given the rise in interest rates, the share of first-time buyers may also increase. They don't have their own home that is falling in value and lower prices mean you need less equity to finance a home.'


However, the interest rate increases at banks also provide a disadvantage, Korevaar mentions. 'Mortgage lenders, for example, are becoming more cautious in granting loans, which are especially important for first-time buyers. Rising interest rates also put pressure on new construction, resulting in fewer homes being finished, and with falling prices, sitting residents are less likely to sell their homes.' In cases where the economy is struggling, this is not a good sign for house seekers. Mainly first-time buyers with a lot of housing wealth can benefit at these times; others, currently struggling with unemployment, will have to wait for better times.

Assistant professor
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You can download the full article from the AD, 19 November 2022, above.

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