The continued growth in home prices makes it more difficult for first-time buyers to purchase a home. Since 2013, the number of homes sold to first-time buyers out of total home sales to households has dropped from 48% to 32% in 2019, as the recovery of the purchase market from 2013 was mainly accounted for by first-time buyers. According to the Land Registry, in 2018 there were approximately 52,000 first-time homebuyers aged eighteen to thirty-four who had never owned a home before.
The credit crisis in 2013 led banks to impose much stricter requirements on the creditworthiness of clients to whom mortgages are granted, by the Financial Markets Authority, in order to provide mortgages. These measures have the important objective of reducing the risks of late payments and excessive residual debt. Mortgage lending standards were legislated in 2013 to prevent overcrediting. The maximum mortgage value compared to the value of the home (loan-to-value; LTV) has since been reduced incrementally by one percentage point per year to 100 percent in 2018. In addition, a mortgage repayment requirement was instituted and the maximum size of the mortgage loan compared to income was tightened (loan-to-income; LTI). Despite the economic recovery, these mortgage lending standards have not been updated and this comes at the expense of the starter who has not built up any start-up capital.
Because investors do not have this problem of financing, a spiral could occur where the home will be sold to the investor, who then charges higher rents. The starter who was unable to secure the home will have to pay the high rent, leaving no room to save. Because the starter has not been able to save, they will never be in an equal position as the investor. Research by the Financial Markets Authority (AFM) shows that the liquid buffer by age of the breadwinner is lowest among the age groups up to thirty-five.
Although net affordability remains fairly constant due to low interest rates, new mortgage rules make it more difficult to buy a home. Homebuyers can get a maximum mortgage of about 4.5x their income. In 2013, a home in the Netherlands was already difficult to finance for a single earner with a modal income, as the average house price was 7x a modal income. This factor has since risen further to 9x a modal income because since 2013 house prices have been rising faster than incomes. Housing prices in the Randstad have risen even faster, making it even more difficult for modal incomes to finance a home in this region.
