Amsterdam: Dutch house prices have stabilised but nearly one-third of homes have negative equity, posing a risk to financial stability as recovery remains fragile, the Dutch central bank said.
Since the financial crisis peaked in 2008, Dutch home prices have tumbled 21.5 per cent, the DNB said in its quarterly financial stability assessment. That compares with 18.1 per cent in the United States and 13.5 per cent in the United Kingdom.
Of the core euro states, the Netherlands was among the hardest hit by the European debt crisis. The economy grew at an annual rate of 0.8 per cent in the fourth quarter of 2013, but unemployment is still rising and more people are encountering problems making monthly mortgage payments.
“The number of payment arrears and losses on mortgages has remained limited,” the central bank said. “However, the large mortgage portfolio remains a weakness.”
The large number of mortgages where the debt exceeds the value of the home remains a latent risk to the banks and the government, it said.
The Netherlands has one of the highest mortgage debts in the world, at 108 per cent of annual GDP. Only Ireland has a higher number of homes with negative equity, at 52 per cent, the DNB said.
The number of people with payment delinquencies will continue to increase along with unemployment, the DNB said, but it will remain low compared to Ireland and Spain, which witnessed much steeper home price falls.
