23-08-2012 Nearly a quarter of Dutch homeowners are expected to have a residual debt at the end of next year. They then have a mortgage that is higher than the value of their home. This was reported by de Volkskrant on 10 August. The paper is based on predictions from ING economists in the new Housing Market Quarterly Monitor.

According to the predictions of the ING economists, the number of households with a possible residual debt, a negative difference between mortgage and sales value, is increasing considerably. Where in mid-2011 517,000 households had a residual debt, this number will reach 800,000 households by the end of next year, or 23 percent of all homeowners with a mortgage.

House prices are falling

In its calculations, ING assumes that house prices will fall by 5 percent in both 2012 and 2013. The bank also assumes that the housing market measures from the Spring Agreement will be implemented on 1 January 2013. The forecasts do not hold accounts with any financial buffers: savings or other capital with which households can absorb the residual debt. However, most households do not have enough buffer to absorb the residual debt.

Less supply of houses

The consequences of the rising number of residual debts are also becoming increasingly visible on the supply side of the housing market. ING and the NVM brokerage association both noticed an unexpected decrease in the number of homes for sale compared to 2011. This could indicate that more and more potential home sellers decide not to sell their house in order to prevent a residual debt. If house prices fall further, this effect could also become stronger.