3 ms·

Although I've loved living here and generally am on board politically with the social welfare program, government policy here really seems to be messing with th

by airza 6y ago

Although I've loved living here and generally am on board politically with the social welfare program, government policy here really seems to be messing with the housing market! Houses almost inevitably go for exactly the mortgage amount the government insures, with cash on top of that. The median income here is ~36,000 euros but this amount is over 300,000 euros! It's baffling. It has the nice effect of making the loan rates just over 1% or whatever, but it doesn't have to be this way... I'm sure DFI is keeping the insane bubble going, but I wish they would make this a priority.

apexalpha 6y ago
Yes, this is very true. Dutch housing is insane now. Most of the recent increase is due to lower interest rates by the ECB, driving up the price as you say. But in the 90s and 00s people would regularly borrow up to 120% LTV with no downpayment whatsoever. It was the norm to just also borrow for a new kitchen or bathroom, and €0 downpayment on it all. Ridiculous situation that the banks exploited by offering interest only loans or even stock-mortgages where they would put your down payment in stocks in stead of paying down the mortgage. The government slammed down hard on it all after 2008 and is also building down the interest deduction, luckily.
- jonkoops 6y ago
  As a young house-owner I am quite upset at the banks and at the older generation. They reaped all the benefits, whilst I end up with debt out of college and don't have access to cheap housing. We got fucked by the boomers so hard. Even my grandfather, who bought his house for 75.000 guilder and is now 83 still has outstanding debt due to this system of interest only mortgage. He's lucky that he can sell his house at a huge profit if he wants to live in a care home, but I am sure the bank earned what he borrowed and then some over his lifetime. Also the fact that the government is killing the NHG is infuriating, they know damn well that housing is too unaffordable for young people to qualify anymore.
  - apexalpha 6y ago
    Yes, interest only loans only benefit one party: the banks. And they preyed on financially illiterate people for their profits. All while reaping bonuses and then getting bailed out in 2008. The government is not killing NHG, though.
  - bollorior 6y ago
    Your grandfather is surely much better off than if he had been renting that house all those years. He would also have paid a huge total amount (to a landlord) and wouldn't have any share in the appreciation of his house value. He also probably has better security of tenure (a landlord could have decided to evict him and sell the property when the price went up).
em500 6y ago
My understanding, from international friends, and many internet articles (like the recent Bloomberg piece on Berlin rent control), is that housing policy is pretty bad in almost all desirable places globally, be it London, Berlin, Stockholm, Hong Kong, Sydney, San Francisco or Amsterdam. The economics around housing are usually simple, but the politics seem intractable. Increasing attractiveness of some location always leads to higher prices, which can only be relieved by increasing supply (or decreasing the local attractiveness). But there are almost always forces opposing increased building, so politicians revert to demand side policies such as loans/interest rate policies or price controls, which have many downsides that are less immediately visible.
- mattmanser 6y ago
  The politics are they've created a massive, decades long, bubble, and no-one can afford to have it pop during their electoral term for fear of never getting elected again.
- chii 6y ago
  > housing policy is pretty bad in almost all desirable places globally or, perhaps it's that if a place is desirable, the prices are going to be unaffordable since space is always limited. Perhaps policies have nothing much to do with it at all.
  - bluGill 6y ago
    In theory. In practice space isn't that limited. As housing gets more expensive it becomes economical to build taller which brings things back down. A 200 sq meter house (not small, though there are plenty larger) could be 1 floor, or 5 floors 40 sq meters for only slightly more money. The latter can fit on a much smaller lot, and so we can fit 5 times as many people in single family houses if we wanted. (at that density public transit works well so the amount of car infrastructure needed is about the same either way, with the later only needing cars for delivery and maintenance) You can go taller as well, but above about 5 floors the standard house construction isn't strong enough and so there is an additional cost to better engineering to account for.

by airza 6y ago

apexalpha 6y ago

Yes, this is very true. Dutch housing is insane now. Most of the recent increase is due to lower interest rates by the ECB, driving up the price as you say. But in the 90s and 00s people would regularly borrow up to 120% LTV with no downpayment whatsoever. It was the norm to just also borrow for a new kitchen or bathroom, and €0 downpayment on it all. Ridiculous situation that the banks exploited by offering interest only loans or even stock-mortgages where they would put your down payment in stocks in stead of paying down the mortgage. The government slammed down hard on it all after 2008 and is also building down the interest deduction, luckily.

jonkoops 6y ago
As a young house-owner I am quite upset at the banks and at the older generation. They reaped all the benefits, whilst I end up with debt out of college and don't have access to cheap housing. We got fucked by the boomers so hard. Even my grandfather, who bought his house for 75.000 guilder and is now 83 still has outstanding debt due to this system of interest only mortgage. He's lucky that he can sell his house at a huge profit if he wants to live in a care home, but I am sure the bank earned what he borrowed and then some over his lifetime. Also the fact that the government is killing the NHG is infuriating, they know damn well that housing is too unaffordable for young people to qualify anymore.
- apexalpha 6y ago
  Yes, interest only loans only benefit one party: the banks. And they preyed on financially illiterate people for their profits. All while reaping bonuses and then getting bailed out in 2008. The government is not killing NHG, though.
- bollorior 6y ago
  Your grandfather is surely much better off than if he had been renting that house all those years. He would also have paid a huge total amount (to a landlord) and wouldn't have any share in the appreciation of his house value. He also probably has better security of tenure (a landlord could have decided to evict him and sell the property when the price went up).

em500 6y ago

My understanding, from international friends, and many internet articles (like the recent Bloomberg piece on Berlin rent control), is that housing policy is pretty bad in almost all desirable places globally, be it London, Berlin, Stockholm, Hong Kong, Sydney, San Francisco or Amsterdam. The economics around housing are usually simple, but the politics seem intractable. Increasing attractiveness of some location always leads to higher prices, which can only be relieved by increasing supply (or decreasing the local attractiveness). But there are almost always forces opposing increased building, so politicians revert to demand side policies such as loans/interest rate policies or price controls, which have many downsides that are less immediately visible.

mattmanser 6y ago
The politics are they've created a massive, decades long, bubble, and no-one can afford to have it pop during their electoral term for fear of never getting elected again.
chii 6y ago
> housing policy is pretty bad in almost all desirable places globally or, perhaps it's that if a place is desirable, the prices are going to be unaffordable since space is always limited. Perhaps policies have nothing much to do with it at all.
- bluGill 6y ago
  In theory. In practice space isn't that limited. As housing gets more expensive it becomes economical to build taller which brings things back down. A 200 sq meter house (not small, though there are plenty larger) could be 1 floor, or 5 floors 40 sq meters for only slightly more money. The latter can fit on a much smaller lot, and so we can fit 5 times as many people in single family houses if we wanted. (at that density public transit works well so the amount of car infrastructure needed is about the same either way, with the later only needing cars for delivery and maintenance) You can go taller as well, but above about 5 floors the standard house construction isn't strong enough and so there is an additional cost to better engineering to account for.