Paul Buitink interviews Alfonso Peccatiello about the housing market

House prices in the Netherlands behave like bond prices and as a result, prices can fall sharply when interest rates rise. That's according to analyst Alfonso Peccatiello of The Macro Compass in a conversation with Paul Buitink of Holland Gold. He notes that the situation in the housing market has deteriorated sharply, as the purchasing power of home buyers has decreased. People are getting less mortgage due to higher interest rates, while they are losing purchasing power due to high inflation.

Peccatiello concludes that at the current price level, there are fewer and fewer buyers for houses. This means that prices will eventually go down and many households will also adjust their behaviour. People are more likely to abandon plans to buy a second home to rent out or to increase the mortgage for a renovation. Willingness to buy will also decline if house prices start to fall.

These developments will reinforce each other. When house prices rise, people take more risks and borrow more, but when prices fall, they do the opposite. Then people prefer to reduce their debts and investors become more reluctant to get into real estate with borrowed money. According to Peccatiello, we are now at a tipping point with the housing market and the stability of the financial system.

Watch the full conversation by clicking on this link

Alfonso Peccatiello sees tipping point in the housing market