Funda introduces house swapping

To get the economy going, the housing market has to become unstuck first. Just as the government announced their housing reform package, housing website funda tell PHILIP HOFMAN that house swapping may be just what desperate house sellers are waiting for.

Many people want to move, but are not prepared to buy a new house before their current property has been sold. This stalemate has paralysed the housing market over the past few years. Housing site funda attempts to break this vicious circle by a one-on-one matching service which encourages house sellers to buy each other’s houses. The new service is simply called ‘Woningruil’ (House swap) and has been trialled by 150 estate agents over the past few months. In April it will go nationwide. Funda capitalises on the fact that house sellers are often prospective buyers too. It matches both characteristics of houses for sale and buying preferences of sellers.  As the website signals a potential match, an estate agent is alerted. He contacts them to find out if they may be interested in buying each other’s houses. “It is not Columbus’ egg,” says estate agent Sierd Moll from the Frisian town Gorredijk, who thought of the idea. “But those who manage to sell their houses this way are very happy. It instantly solves their problem.” The number of swaps in the trial is modest, but Moll thinks house swapping can easily grow to 10 per cent of all house sales once all estate agents take part. “If they really embrace it, it can become much more.” Differences in house values are no obstacle to the swaps, says Moll. “Elderly people want to move to smaller, cheaper houses, while young families looking for more space are prepared to spend more.”

Funda’s initiative may relieve some house owners desperate to move, but it would be naïve to expect it to single handily resurrect the housing market. House swapping is of no use to first time buyers and elderly people or heirs wanting to sell a property without buying one back. It does however put a finger on the sore spot of the Dutch economy, which is set to shrink by half a per cent this year, according to The Netherlands Bureau for Economic Policy Analysis (CPB). Unemployment will grow by 90,000 people to 560.000. CPB director Coen Teulings says consumer confidence only slid faster in Greece since the beginning of the crisis. The Dutch have money, but refuse to spend it. The cause, says Teulings, are house prices, which have slid 23 per cent over the last few years including inflation. Yet, the Rabobank, the countries’ largest mortgage provider, said in its quarterly housing market report published in February that house sales were up considerably in the last quarter of 2012, while prices stabilised. Unfortunately, that was mainly because the rules for deducting mortgage interest from taxable income were set to become more stringent from 1 January and buyers rushed to benefit from the more favourable outgoing tax rules. 

In February the government reached an agreement with opposition parties D66, SGP and the ChristenUnie about a housing market reform package. The plan contains income-dependent rent-increases, a new tax for housing associations which will gradually rise to € 1,7 billion by 2017, plus an increase in funding for first-time buyers from € 20 million to € 50 million. As for mortgages, they will have to be paid off within 30 years through annuity based monthly instalments. For anyone with a mortgage, this means less deductible interest and higher monthly costs. The rent increases are aimed at people with a relatively high income who live in social housing. The government wants these tenants to pay a rent more in line with the market value. If some would thus be encouraged to buy a property, this would also have the benefit of stimulating the housing market. The levy on housing associations seems primarily aimed at keeping the budget deficit in check. So, will this package resurrect the housing market? No, say a 54 per cent majority of a panel of 48 economists, polled by Me Judice, a debating site for economists. Central bank president Klaas Knot does welcome the reforms. Reducing tax benefits on house borrowing and making house buyers fully redeem their mortgages will pay their dividends, he says. “In the long run it makes for more sound property financing and makes it easier for banks to finance their mortgage portfolios. It will lead to a more stable price development in the housing market,” he said to radio station BNR. Knot thinks that house prices have largely bottomed out. Stability is on the horizon, he says, be it at a fundamentally lower level than before the crisis.