Dutch housing market quarterly: End of the price rally – housing market cools down

The price development of existing owner-occupied homes has been on the decline since the beginning of last year. The rate at which house prices are rising has been gradually slowing down since then. Compared to March, prices remained stable on a monthly basis in April. Compared to the same month last year, however, the price index of existing owner-occupied homes of Statistics Netherlands was still 4.3% higher in April. By comparison, in November 2024, the year-on-year price increase peaked at 11.9%. The cause? Many houses are still coming on the market, partly due to the wave of sales of ex-rental properties – the so-called sell-out wave. On the demand side, we are also seeing some drop in demand due to the deteriorating affordability of owner-occupied homes.

While nominal house prices are moving towards zero, real house prices are now falling (figure 2). This is the price development adjusted for inflation. Real house prices were only 1.8% higher in April than a year earlier: about the same price level as at the beginning of the energy crisis. We expect inflation to pick up again this year. This is expected to put further pressure on the development of real house prices. As a result, the affordability of owner-occupied homes will improve in relation to other goods and services and also in relation to incomes. Because real wages are expected to continue to rise.

Middle East conflict likely to impact housing market

Due to the conflict in the Middle East, mortgage rates have risen slightly and uncertainty has increased. The consequences of this are not yet visible in house prices as reported by Statistics Netherlands. This is because the reference date of their statistic is the moment of the transfer of the house at the notary. That is on average about three months after signing the preliminary purchase contract.

However, the first signals about the impact of the conflict are now trickling in. For example, more than a third of NVM real estate agents see that prospective buyers are becoming more cautious and more hesitant. People take less risk and take more time when buying a home. It also results in fewer viewings. This reinforces a trend that we have seen for some time: on average, there are fewer and fewer contact requests per home (Figure 3).

Recently, the sentiment on the owner-occupied housing market has also become slightly more negative. This is, however, not a massive nosedive, as seen in consumer confidence (figure 4). This is in line with the impression that especially confidence in the economic climate has been dealt a severe blow. Confidence in people’s own financial situation also fell, but less sharply. And it is precisely expectations about the personal financial situation that strongly determine actual consumer behaviour. This explains why we also saw confidence in the general economic situation plummet in previous crises, such as the corona pandemic, without having a major impact on the housing market. In fact, despite all the uncertainty, price growth actually picked up after 2019. The energy crisis did lead to falling house prices, but the magnitude of the market correction can be fully explained by the sharp rise in mortgage rates in a short period of time. We do not see a strong additional confidence effect in the period after the energy crisis. We therefore expect that the influence of trust in the market will remain limited.

The first signs of a turnaround in the housing market are also visible in other countries

As in the Netherlands, house prices also fell in many other Western European countries after the Russian invasion of Ukraine (figure 5). It is striking that after the price dip in 2022/2023, surrounding countries experienced a much slower recovery than the Netherlands. Real house prices are often still a lot lower than in 2022. The German housing market has been hit particularly hard: real house prices there are still 20% lower than at the peak at the end of 2021 (the price level in nominal euros is now almost back to pre-crisis levels). New construction also fell sharply in Germany. The US was much less affected by the war in Ukraine, because energy prices remained relatively low. Although relatively moderate, house prices continued to rise.

The consequences of the conflict in the Middle East are not yet reflected in the published statistics in many other countries. Moreover, the signals that are there are twofold. Especially from Oceania – which has been hit particularly hard by disruptions in the supply of oil products – there are gloomy reports. For example, the Australian housing market has now reached a turning point. In New Zealand, a sharp decline in the number of transactions is visible and house prices have stagnated. Closer to home, the UK Nationwide Building Society reported that UK house prices fell by 0.6% in May. The German housing market, on the other hand, is still in the recovery phase, with house prices continuing to rise for the time being.

We expect house prices to rise by 2.8% this year and by 2.0% next year (Figure 6). Compared to our previous (interim) housing market forecast, our forecast for 2026 has remained virtually the same (a reduction in expected price growth from 2.9% to 2.8%). For 2027, the adjustment is slightly larger, as we previously assumed an average house price growth of 3.1% for that year.

Despite the house price increase for 2026, we do not expect house prices to rise further this year. But because of the substantial price rise during 2025, the average price level in 2026 will still be higher than last year. The price increase is therefore the result of the so-called spillover effect. The fact that we still foresee price stabilisation for this year – in our previous estimate we also assumed flattening house price growth within 2026 – is mainly due to the continuing wave of sales of rental homes and the deteriorating affordability of owner-occupied homes. The conflict in the Middle East also has an effect.

We assume a decrease in the housing supply after this year, due to less new construction and because the sell-out wave of ex-rental properties is gradually fading out. House price developments will therefore pick up somewhat next year, although the same carry-over effect will lead to a relatively moderate development of the annual figure.

Macroeconomic outlook more gloomy

The macroeconomic picture is slightly more gloomy compared to the previous forecast round. In our previous quarterly report, we assumed that the Strait of Hormuz would reopen at the beginning of June. But in our new baseline, we expect the negotiations will not yield results for the time being and that there will be no large-scale shipment of oil and liquefied natural gas (LNG) through the Strait of Hormuz until September.

Due to the outbreak of the conflict in the Middle East, the Dutch economy will grow less rapidly in the coming period. For this year, our macroeconomists foresee economic growth of 1.0% followed by 0.8% next year. Unemployment will rise further this year – albeit less steeply than previously anticipated – from 3.9% in 2025 to 4.2% in 2026 and 4.5% in 2027.

The conflict is causing energy prices to rise and in particular the price of oil. This affects the prices of all kinds of goods, albeit sometimes with some delay. In the long run, higher inflation will also affect wages – employees want to be compensated for higher prices – and therefore also the prices of services. HICP inflation is expected to rise to 3.0% this year before rising further to 3.9% next year.

Higher inflation and the risk of inflation have consequences for capital market interest rates, which are an important indicator of mortgage rates. At the time of writing – at the beginning of June – the 10-year swap rate is about 30 basis points (0.3%-points) higher than at the end of February (figure 7). However, because capital market interest rates initially fell somewhat at the beginning of this year, the difference with the beginning of January is only 5 basis points. Our interest rate experts expect capital market rates to rise further this year – following the trend we have seen since the beginning of 2025 – after which they will be more than 20 basis points higher at the end of this year than they are now.

With higher interest rates, home buyers can borrow less with the same income. But wages are also expected to rise this year and next, by 4.3% and 4.0%, respectively. In both cases, well above the long-term average of 2.1% over the period 2000-2021. We anticipate an increase in borrowing capacity this year in particular (Figure 8). It is estimated that a household with two average annual incomes can borrow just under EUR 14,000 more for a house this year than in 2025. For 2027, it is a different story: the increase in borrowing capacity that we estimate will then be only EUR 2,000; higher interest rates cancel out the effect of higher wages.

The fact that the interest-and-wage effect will be so different this year than next year is related to the way in which the National Institute for Family Finance Information (Nibud) calculates the maximum borrowing capacity. It calculates with interest brackets of 0.5%-points. Each interest bracket has a maximum permitted financing burden, which increases with the interest rate to take into account the mortgage interest deduction. A small increase in interest rates can cause you to fall into a higher interest bracket, allowing you to borrow not less but rather significantly more. To illustrate: at an interest rate of 3.5%, a household with two average annual incomes can borrow approximately EUR 460,000 for an energy-efficient house with energy label A or B. At an interest rate of 3.501% (which falls in the next bracket), that amount rises to approximately EUR 478,000. Only with a further rise in interest rates to 3.82% will the maximum mortgage fall below EUR 460,000. And while we expect rising interest rates to go hand in hand with a shift to the next interest bracket this year, we expect the average homebuyer to remain within the same interest bracket even with the anticipated further interest rate rise, which will put pressure on the maximum mortgage. However, our estimate is a rough indication. After all, the exact interest bracket differs greatly between home buyers. For example, households with a National Mortgage Guarantee (NHG) usually pay a relatively low interest rate, as do homebuyers with a low mortgage compared to the market value of their home, and some homeowners can take the lower interest rate of their existing mortgage with them.

Number of homes for sale is no longer increasing at a rapid pace

In addition to demand developments, trends on the supply side of the housing market also play an important role in the overall market development. Our expectations about the supply have been tempered. This is because we foresee a decline in new construction after this year due to a combination of supply and demand factors (more on this in chapter "Less housing construction after 2026"). And less new construction usually also means fewer 'for sale' signs in existing buildings, because there is less flow. Unlike in the past two years – when supply was on the rise due to the sell-off among residential investors – we also expect a decline in the number of homes that residential investors put up for sale in the short term. This is because many ex-rental properties that private investors sell were rented out under a temporary contract. These contracts were allowed to last a maximum of two years. But as of July 1, 2024, new legislation has come into effect that reinstates permanent rental contracts as the standard.

In line with our earlier expectation, the peak in the number of sales by home investors to regular home buyers now seems to have been reached. Last year, we saw the growth in the pace at which the wave of sales of rental properties took place weaken a little further every quarter. Over the past four quarters, landlords have sold just under 39,000 ex-rental homes to owner-occupiers; a fraction less than the number of sales in the whole of 2025 (Figure 9). They actually bought slightly more homes, causing net sales to fall slightly for the first time since 2023. In addition, plans are being made at the Ministry of Housing to ensure that fewer investors drop out. Although the announced measures are insufficient to stop the wave of ex-rental sales, according to a poll by Vastgoed Belang, the figures from the Land Registry suggest above all that the bulk of those who wanted to get out have already done so. The drop in supply dampens the price effects of the decline in demand for owner-occupied homes that we anticipate.

In the first three months of the year, there were again strong regional differences in the rate at which house prices are growing. A clear distinction can be made between regions in the west of the country and regions in the east of the country: in the west – especially in the northern wing of the Randstad – house prices rose less rapidly than in the east (figure 10). In Greater Amsterdam and the surrounding area, existing owner-occupied homes were even 'only' 2.4% more expensive than a year earlier. House prices in this region therefore rose about as fast as consumer prices; because inflation (HICP) was 2.3% in the first quarter of this year. In real terms, house prices hardly rose. This also applies to some of the regions surrounding Amsterdam. Leader East Groningen, on the other hand, recorded a house price growth of 9% in the first quarter.

The fact that house prices are rising especially fast in Groningen is not a one-off fluke. In the past two years, the regions in that province have recorded above-average house price growth time and again. It is not like that everywhere. For example, the regions of Flevoland and Utrecht were characterised by relatively strong house price growth for a long time. But that came to an end last year. While prices in Utrecht rose by an average of 13% in the first quarter of last year, the average price growth this year for the same period remained at 4.7% – even below the national average of 5.2%. In Flevoland, existing owner-occupied homes were 'only' 3.7% more expensive in the first quarter than last year.

The wave of sales of ex-rental properties plays an important role in the regional differences in house price developments. The extra supply of homes has a negative impact on prices, especially in regions with many rental houses. These are often large cities. In more rural regions, this extra supply is much smaller, which means that the housing market there is relatively tighter.

We also expect the highest average house price increase in the East Groningen region for the whole of 2026 (Figure 11). House prices there are expected to rise by 6%. Other regions where we expect relatively high price increases – such as North Limburg and the Achterhoek – are also on the edges of the country. Amsterdam and the Haarlem region are at the bottom of our house price forecast. Here, house prices will only rise slightly: we assume an average price increase of 1%. The regional picture predicted for this year therefore resembles that of last year. We expect this regional picture to shift from next year. Because the wave of ex-rental house sales is gradually fading out, the housing market is tightening in the metropolitan regions where there is now a relatively large supply of ex-rental homes. As a result, house price growth there is likely to pick up.

As usual in the spring, we are seeing an uptick in the number of homes for sale. But even without this seasonal effect, there is more supply. Compared to a year ago, there are currently more than 18% more houses for sale on the Funda housing platform throughout the Netherlands. The market has so far absorbed this extra supply well: in the past twelve months, as many as 244,000 homes changed hands, almost matching the sales records set in 2021 (Figure 12). More than 35% of the existing owner-occupied homes sold were apartments. At the beginning of 2020, this applied to only one in four homes sold. Partly due to the wave of sales of ex-rental homes, apartments have gained increasing weight in the total number of house sales.

Although the number of house sales is still rising, the momentum is slowing down somewhat (Figure 13). Year-on-year, 12.5% more homes were sold in the past twelve months than a year earlier. That is solid, but in October it was still 17.9%. Apartment sales in particular are no longer increasing as fast as in the first three quarters of 2025. This fits with the image that the wave of sales of ex-rental homes seems to have reached its peak.

Fewer homes will change hands this year and next year

Whereas 239,000 homes changed hands last year, this year there are expected to be 227,000; about 12,000 fewer than in 2025 (Figure 14). For 2027, we expect a further decline in the number of transactions to 200,000 homes. The anticipated decrease in the supply of ex-rental homes will depress the number of possible transactions on the owner-occupied housing market. While the supply this year is still affected by the completion of a relatively large number of new-build homes, we expect less new construction in the coming years. Moreover, on the demand side, we see that some potential home buyers are dropping out.

We expect more new homes to be completed this year than last year's 69,000. The downward trend in completions of the past three years is finally broken. The increase in completions is related to the large number of homes under construction (Figure 15). There are a lot of homes in the pipeline. This is not only due to a lot of construction activity, but also because the construction of new-build homes is taking longer and longer. Especially in apartment complexes, we see a lot of delays during the construction process.

Looking ahead, we do not expect housing construction to move in the direction of the targeted 100,000 homes per year in the short term. Both demand factors and supply factors play a role in this. Although municipalities issued 91,000 housing permits in the past twelve months, the past tells that they issue a lot more homes than builders and developers actually build (Figure 16).

Sales of new owner-occupied homes have been declining for some time (Figure 17). For example, in the first four months of this year, 12% fewer new-build owner-occupied homes were sold than in the same period last year. NVM estate agents point out that it has recently taken a little longer to get new-build homes sold; Apartments in particular are more difficult to sell. Prospective buyers would drop out because the supply does not match the demand. The long lead times and the associated higher bridging costs also depress demand. Moreover, new-build apartments are currently facing competition from the many cheaper ex-rental apartments that are entering the owner-occupied sector.

And the effect of the conflict in the Middle East is added to that. New construction is relatively sensitive to fluctuations in interest rates and economic cycles. It is already often difficult to calculate projects financially. And that could become even more difficult in the near future. Due to rising inflation, building materials such as hardwood, cement and steel are becoming more expensive. Developers can hardly pass on these higher construction costs to the buyers of new-build homes, meaning the number of new owner occupied homes constructed is likely to be affected. Government requirements of the share of affordable homes in new construction also plays a role. A small increase in the purchase price of owner-occupied homes can already lead to them no longer being considered part of the affordable segment. And an increase in the purchase prices of rental properties leads to landlords dropping out, because they are limited in their ability to charge a higher rent due to rent regulation in the social rent and mid-market rental sector.

Finally, bottlenecks on the supply side of housing construction remain persistent. Not only does the entire process from plan to realization take a very long time, but the Water Framework Directive that will apply from 2027 and the problems surrounding grid congestion are hanging like a dark cloud over housing construction. The power grid has reached maximum capacity in many Dutch regions. Connecting a new-build home to the electricity network is therefore no longer a matter of course. Because from the summer, small-scale users will also be put on the waiting list if there is insufficient capacity. Although housing construction has a high priority, a better place on the waiting list does not guarantee a connection.