The Netherlands' house price growth is accelerating again, amidst increasing demand and weak residential construction activity.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

In November 2024, the price of existing homes in the Netherlands rose strongly by 11.97% from a year earlier (7.64% inflation-adjusted), in sharp contrast with the year-on-year decline of 0.69% in the same period last year, according to Statistics Netherlands (CBS). In fact, it was the highest growth recorded since July 2022. Nationwide house prices have been rising by double-digit figures in the past five months.

The average purchase price for existing homes in the Netherlands was €461,931 (US$480,823) in November 2024.

In Amsterdam, the country's capital, the average price of existing homes was up by 10.08% (6.27% inflation-adjusted) in Q3 2024 compared to the previous year, following a year-on-year price fall of 5.7% in Q3 2023. Quarter-on-quarter, house prices in the capital city increased by 3.31% (1.57% inflation-adjusted) during the latest quarter.

The other major cities, The Hague, Rotterdam, and Utrecht, saw annual house price increases of 9.9%, 8.9%, and 18.5%, respectively, over the same period.

Strong house price growth is expected to continue next year. ABN Amro projects nationwide house prices to increase, on average, by 8.5% this year and by another 7% in 2025.

"We raise our 2024 price estimates from +7.5% to +8.5% and those for 2025 from +5% to +7%," said ABN Amro's October 2024 Housing Market Monitor report. "The main factors behind price growth on the demand side are higher wages, declining mortgage rates, and the widening of mortgage lending standards with respect to preservation and with respect to those borrowing on a single income basis."

"Housing demand is growing, but supply is slow to respond," added the ABN Amro report.

By property type, in Q3 2024:

• Single-family home prices surged by 11.04% (7.2% inflation-adjusted) from a year earlier, and by 3.73% (1.99% inflation-adjusted) from the previous quarter.
• Apartment prices were up strongly by 11.45% y-o-y in Q3 2024 (7.59% inflation-adjusted). Quarter-on-quarter, prices increased by 3.49% (1.75% inflation-adjusted).
• Terraced house prices skyrocketed by 12.74% (8.85% inflation-adjusted) from a year earlier, and by 3.97% (2.22% inflation-adjusted) from the prior quarter.
• Detached house prices increased by 8.12% (4.38% inflation-adjusted) y-o-y, and by 3.05% (1.32% inflation-adjusted) q-o-q in Q3 2024.
• Semi-detached house prices rose strongly by 10.31% (6.49% inflation-adjusted) y-o-y and by 3.93% (2.18% inflation-adjusted) q-o-q in Q3 2024.
• Corner houses saw an average price increase of 11.7% (7.84% inflation-adjusted) y-o-y in Q3 2024, and 3.95% (2.2% inflation-adjusted) q-o-q during the latest quarter.

Netherlands's house price annual change

After a great housing boom (1995-2007), the Dutch housing market weakened in 2008 and only began to recover in 2014. From Q1 2014 to Q4 2019, house prices rose by almost 40% nationally, with very strong increases in Amsterdam (77.4% growth) and Rotterdam (61.8% growth). Despite the Covid-19 pandemic, nationwide house prices rose by a huge 27.3% from 2020 to 2021.

However, the housing market started to weaken in 2022, with nationwide house price growth decelerating to 5.1%. Then in 2023, house prices fell slightly by 0.6% - the first year of decline in a decade. However, the housing market bounced back this year, with the nationwide house prices rising by 11.1% during the year to Q3 2024, with most provinces and major cities experiencing double-digit house price growth.

Property demand is increasing again. In the third quarter of 2024, the total number of dwellings sold in the Netherlands rose by 11% y-o-y to 36,940 units, according to the NVM, following annual declines of 5.5% in 2023, 14.6% in 2022 and 4% in 2021. Quarter-on-quarter, dwelling sales were up slightly by 1% in Q3 2024. This is in line with figures from Kadaster, which showed that the total number of homes sold in the country in the first eleven months of 2024 reached 182,634 units, up by 12% from the same period last year and already exceeded the full-year total sales for 2023.

Yet the overall economic condition remains weak. The Dutch economy grew by 1.7% in Q3 2024 from a year earlier, an improvement from a minuscule growth of 0.8% in Q2 2024 and year-on-year contractions of 0.6% in Q1 2024, 0.5% in Q4 2023, 0.7% in Q3 2023 and 0.3% in Q2 2023, according to figures released by the CBS.

The country is expected to pose a lackluster performance this year, with a projected real GDP growth rate of 0.8%, following a nearly zero growth in 2023 and strong expansions of 5% in 2022 and 6.3% in 2021, based on a forecast released by the European Commission. In fact, the DNB expects a more conservative figure of 0.5% growth for the whole year of 2024.

Historic Perspective:

History of the Netherlands' housing boom and bust

Median house prices in the Netherlands rose by 104% (73% inflation-adjusted) from Q1 1996 to Q2 2001, or by an average of 21% annually (14.6% inflation-adjusted). Amsterdam house prices rose by about 132% (96% inflation-adjusted) during this period. This was a time when real private sector wages rose by 3.6% annually.

House prices continued to rise until Q1 2008, alternating between slow growth and rapid growth.

However, with the global financial crisis, coupled with the Eurozone debt crisis, the Dutch housing market went into a tailspin. By 2013 things were so bad that the total number of dwellings sold had dwindled by almost half, to around 110,094 units, compared to an average of 206,000 dwellings sold annually from 2005 to 2007.

In 2014 the Dutch housing market started to recover. From Q1 2014 to Q4 2019, house prices rose by almost 40% nationally, with very strong increases in Amsterdam (77.4% growth) and Rotterdam (61.8% growth). Despite the Covid-19 pandemic, the housing market remained resilient, with nationwide house prices rising by another 27.3% from Q1 2020 to Q4 2021.

Then in 2022, house price growth in the country slowed to 5.1%. House prices rose by just 1.2% in Amsterdam and 2.5% in The Hague, and declined by 1.2% in Utrecht.

The housing market dramatically slowed in 2023, amidst rapidly rising interest rates and a slowing economy. Nationwide house prices fell slightly by 0.6% (-1.4% inflation-adjusted) last year.

However, the housing market bounced back this year, with the nationwide house prices rising by 11.1% during the year to Q3 2024. Most provinces and major Dutch cities experienced double-digit house price growth over the same period.

Demand Highlights:

Demand is recovering

In the third quarter of 2024, the total number of dwellings sold in the Netherlands rose by 11% y-o-y to 36,940 units, following annual declines of 5.5% in 2023, 14.6% in 2022, and 4% in 2021. Quarter-on-quarter, dwelling sales were up slightly by 1% in Q3 2024, according to the NVM.

By dwelling type:

• Apartment sales soared by 19% y-o-y to 11,810 units in Q3 2024, after declining by 2.4% in the whole year of 2023 and 7.7% in 2022. Quarterly, apartment sales increased by 4% during the latest quarter.
• Detached house sales were up by 11% y-o-y to 5,803 units in Q3 2024, following contractions of 6.5% in 2023 and 13.6% in 2022. Quarter-on-quarter, sales were up by 2%.
• Mid-terrace house sales were up by 9% y-o-y to 9,174 units in Q3 2024, an improvement from annual declines of 6.9% in 2023 and 20.8% in 2022. Quarter-on-quarter, sales fell slightly by 1%.
• End-terrace house sales rose by 5% y-o-y to 4,935 units in Q3 2024, after falling by 5.6% in 2023 and 15.7% two years ago. Though quarterly, sales fell by 2%.
• Semi-detached house sales rose by 5% y-o-y to 5,218 units in Q3 2024, in contrast to annual contractions of 4.8% in 2023 and 15.5% in 2022. Though quarter-on-quarter, sales were down by 3%.

Based on figures from Kadaster, the total number of homes sold in the country in the first eleven months of 2024 reached 182,634 units, up by 12% from the same period last year and already exceeded the full-year total sales for 2023.

The time-to-sell, which is the total number of days from the moment a house is put up for sale to the date of sale, stood at 28 days in Q3 2024, slightly up from 27 days in the previous quarter but down from 32 days a year earlier, based on figures released by NVM. Mid-terraced houses had the lowest time-to-sell at just 24 days in Q3 2024, while detached houses had the longest, at 39 days.

Supply Highlights:

Residential construction activity remains weak

During 2023, dwelling completions in the country fell slightly by 1.2% to 73,638 units, following annual increases of 4.7% in 2022 and 1.8% in 2021 and a decline of 2.2% in 2020, based on figures from Statistics Netherlands.

From an annual average of 76,300 units from 2000 to 2009, completions dropped sharply to an average of 60,000 units annually from 2010 to 2022 - mainly due to post-2010 changes in the planning system - which partly explains the rapid rise in house prices in recent years. Pandemic-related restrictions in the past three years weakened residential construction further.

There were 39,549 housing units put up for sale in Q3 2024, down by 8% from 43,009 units in the previous quarter but up by 15% from 34,497 units in the same period last year, according to NVM.

The total housing stock in the Netherlands reached 8,204,049 units in 2023, up slightly by 1% from the prior year. Single-family homes accounted for about 63.5% of total stock.

Rental Market:

Free market yields are good, particularly in The Hague

Gross rental yields in the small up-market decontrolled sector continue to be attractive, at an average of 6.21% in Q4 2024, up from 6.01% in Q2 2024, 5.56% in Q1 2024, and 5.19% in Q2 2023, based on research conducted by the Global Property Guide.

In Q4 2024:

• In Amsterdam, rental yields on apartments range from 2.91% to 5.99%, with a city average of 5%.
• In The Hague, yields are higher at around 4.99% to 7.06%, with a city average of 6.29%.
• In Rotterdam, apartments offer rental yields of between 7.06% and 7.5%, with a city average of 7.33%.

These returns are not princely - but they beat many other countries, given the security of the Netherlands, its stability, rule of law, generally vibrant economy, and good long-term prospects.

The Hague is a less expensive city to buy in and merits consideration by investors. First, it is the seat of government, so most foreign embassies in the Netherlands and 150 international organizations are located in The Hague, including the International Court of Justice and the International Criminal Court. Several large international businesses have their headquarters in The Hague, including Shell, the world's second-largest company in terms of revenue. This means that there is an ideal group of expatriate tenants to whom owners can rent their apartments, as 26% of the jobs in The Hague are either offered by the Dutch government or by international institutions. In addition, for those interested in the short-term rental market, tourism is important, with 1.2 million tourists every year.

Rents rising strongly

During 2024, the average monthly rent in the private liberalized housing sector rose by 5%, up from annual increases of 4.5% in 2023, 3.8% in 2022, 2.2% in 2021, 3% in 2020, 3.3% in 2019, and 3.1% in 2018, according to Statistics Netherlands.

Overall, the rent increase for dwellings (including rent harmonization) accelerated to 5.4% in 2024, up from modest to minimal y-o-y increases of 2% in 2023, 3% in 2022, 0.8% in 2021, 2.9% in 2020, 2.5% in 2019, and 2.3% in 2018. In fact, it was the highest rent increase in the past three decades.

In Amsterdam, the rent increase was 5.2% while it was slightly higher in The Hague, at 5.4%, in Utrecht, at 5.8%, and in Rotterdam, at 5.9%.

In the "free market" sector, which is 8% of the rental stock, rent increases can only occur once per year (applies only to basic rent), but otherwise, depend on clauses in the contract. Usually, the annual rent increase is based on the price index number, or around inflation. Some contracts may also include a clause stating that rent will be increased to market value every five years.

In the social housing market, the maximum basic rent in the Netherlands for rent-controlled dwellings is at €879.66 (US$916) per month in 2024, up from the rent control limit of €808.06 (US$841) in 2023, €763.47 (US$795) in 2022, €752.32 (US$783) in 2021, and €737.14 (US$767) in 2020.

Apartments with basic rents (excluding service and additional charges) lower than or equal to this deregulation threshold are classified as rent-controlled dwellings. About 92% of the rental stock falls in this category, based on ABF Research and IVBN.

The maximum income allowed to live in rent-controlled dwellings is usually raised every year. In theory, only individuals with incomes below the limit are entitled to rent-controlled dwellings.

More specifically, housing associations are required to let 92.5% of their vacant social houses every year to households with income of up to €44,035 (US$45,836) for one-person households or €48,625 (US$50,614) for multi-person households. The remaining vacant social houses are left to households with higher incomes.

Mortgage Market:

Mortgage interest rates stabilizing

In October 2024, the average interest rate for new housing loans stood at 3.73%, slightly down from 3.81% a year earlier but still up from 3.06% two years ago.

For new housing loans, by initial rate fixation (IRF):

• Floating rate and IRF up to 1 year: 5.06% in October 2024, higher than 4.96% in October 2023 and 3.11% in October 2022.
• IRF 1-5 years: 4.03% in October 2024, down from 4.45% in the previous year but still higher than the 3.43% recorded two years ago.
• IRF 5-10 years: 3.53%, slightly down from 3.65% in the previous year but still up from 3.12% in the two years prior.
• IRF 10 years or more: 2.97%, almost unchanged from 2.96% a year earlier and 2.9% two years ago.

For outstanding housing loans, the average interest rate was 2.65% in October 2024, slightly up from 2.52% in October 2023 and from 2.3% two years ago.

Outstanding housing loans, by maturity:

• Original maturity of less than or equal to 1 year: 5.32% in October 2024, up from 5.15% in the previous year and far higher than the 2.63% two years ago.
• Original maturity of 1-5 years: 4.66% in October 2024, up from 4.25% in the previous year and 2.6% two years earlier.
• Original maturity of more than 5 years: 2.63%, slightly up from 2.5% in October 2023 and from 2.29% in October 2022.

New housing loans surging

In the first ten months of 2024, new housing loans drawn rose strongly by 21.9% to €80.69 billion (US$83.99 billion) as compared to the same period last year, based on DNB figures. This is an improvement from the huge decline of 34.2% for the whole year of 2023.

By IRF, in Jan-Oct 2024:

• Floating rate and IRF up to 1 year: €13.24 billion (US$13.78 billion) in the first ten months of 2024, down by 5.7% from a year earlier.
• IRF 1-5 years: €12.46 billion (US$12.97 billion), a sharp increase of 89.2% from the previous year.
• IRF 5-10 years: €37.65 billion (US$39.19 billion), up sharply by 34% from a year earlier.
• IRF 10 years or more: €17.34 billion (US$18.04 billion), down slightly by 0.9% from a year earlier.

More than 68% of new housing loans were fixed-rate mortgages (FRM) of 5 years or more as of October 2024.

Value of housing loans increasing, but size of mortgage market continues to shrink

As a result of the strong growth in new housing loans, total outstanding housing loans in the country rose by a modest 3.7% in October 2024 from a year earlier to €590.24 billion (US$614.37 billion), according to the DNB, up from annual increases of 1.6% in 2023, 2.5% in 2022, 1.7% in 2021, 0.6% in 2020 and 1% in 2019. However, this remains far below the annual average growth of 6% recorded from 2004 to 2010.

From 68% of the GDP in 2003, the size of the Dutch mortgage market expanded to almost 84% of GDP in 2009, based on the Global Property Guide estimates. However, since then, there has been a sharp contraction in the size of the residential mortgage market relative to the economy - to about 57% of GDP in 2023, mainly due to the introduction of new reforms to discourage borrowing.

The previous rise of mortgage debt - the fastest among OECD countries from 2004 to 2010 - was rooted in aggressive government promotion of homeownership since the 1980s. The Dutch fiscal regime allows full tax deductibility of most mortgage interest payments if:

• The house purchased is the main residence.
• The mortgage loan has a period of a maximum of 30 years.
• The profit made on the sale of the previous houses is used to reduce the size of the mortgage on the next one.

Since 1995, 90% of new mortgages have been not repayable till loan maturity, while 30% do not have to be repaid at all ("interest-only").

To discourage excessive mortgage growth, the government made some modest changes around a decade ago:

• In 2001 it removed tax deductibility for mortgages used for non-housing consumption, investments, and second-home purchases.
• In 2002, interest deductibility was limited to 30 years.
• Since January 2004, homeowners who moved to more expensive homes have had to use their capital gains on their former houses for a down payment.

Starting in 2013, the government implemented new reforms:

• The maximum mortgage tax relief was reduced to 38% from 52% over the period of 28 years.
• Mortgages must be amortized over 30 years to be eligible for mortgage interest relief. First-time buyers may have an interest-only mortgage on 50% of the property's value, but the loan's interest is not tax deductible.
• The maximum loan-to-value (LTV) ratio was slowly trimmed from 105% in 2013 (including the 2% stamp duty) to 100% in 2018 where it has stayed since.
• Effective July 1, 2015, the mortgage guarantee (NHG) for mortgages was reduced from €265,000 (US$ 275,838) to €245,000 (US$ 255,020) but was again increased annually in the past six years. In 2024, the NHG limit was increased further, so more people will be eligible for an NHG-backed mortgage when purchasing a new house or remortgage.
  • NHG limit: In 2024, the maximum amount is €435,000 (US$452,790) for existing and newly built properties without energy-saving features, up from €405,000 (US$421,563) in 2023 and €355,000 (US$369,518) in 2022.
  • Energy-efficiency measures: the limit is higher when energy-efficiency measures are included in the mortgage, at €461,100 (US$479,958) in 2024, up from €429,300 (US$446,857) in 2023 and €376,300 (US$391,689) in 2022.
  • Lower mortgage guarantee fee in 2024.
  • In 2024, one can switch from a mortgage without the NHG to an NHG-backed mortgage, provided that the NHG conditions are fulfilled.

Socio-Economic Context:

The Netherlands' inefficient housing subsidies discourage geographical mobility

Traditionally, Holland has had a large social rental housing sector. In the 1950s, owner-occupants accounted for only 29% of the housing stock.

Then the government began promoting home ownership. Now about 60% of the total housing stock is owner-occupied. However, in many major cities (Amsterdam, The Hague, Rotterdam, and Utrecht), about 50% of the housing stock is social housing.

Homeowners receive favorable tax treatment. Aside from full income tax deductibility of mortgage interest payments, capital gains from rising house prices are also not taxed. However, this is partly offset by an annual imputed rental income tax, based on the property's assessed value.

The government provides home-ownership grants to low-income households. Many renters also receive direct government subsidies to keep their rent-to-income ratio within certain limits.

About 39% were rented houses while 61% were owner-occupied. A huge proportion of rented accommodation is owned and managed by housing corporations, which manage about 2.4 million dwellings.

The system is highly inefficient in terms of social objectives. It also reduces mobility both for owner-occupiers and renters.

Economic conditions gradually improving

The Dutch economy grew by 1.7% in Q3 2024 from a year earlier, an improvement from a minuscule growth of 0.8% in Q2 2024 and year-on-year contractions of 0.6% in Q1 2024, 0.5% in Q4 2023, 0.7% in Q3 2023 and 0.3% in Q2 2023, according to figures released by the CBS.

Overall, the country is expected to pose a lackluster performance this year, with a projected real GDP growth rate of 0.8%, following nearly zero growth in 2023 and strong expansions of 5% in 2022 and 6.3% in 2021, based on a forecast released by the European Commission.

In fact, the DNB expects a slightly more pessimistic figure of 0.5% growth for the whole year of 2024.

"The Dutch economy is recovering in 2024, although the growth outlook remains subdued. In the Netherlands as elsewhere, tighter financing conditions have contributed to the cooling of the economy," said the DNB. "Growth was slightly negative in the first quarter of 2024, although a recession has so far been averted and employment has held up. The Dutch economy is recovering in 2024, partly due to higher public spending and private consumption, with expected growth of 0.5%," added the DNB.

The Dutch economy is heavily dependent on foreign trade, with exports accounting for 83% of the country's GDP, making the economy very susceptible to external shocks. For instance, the euro crisis sent the Netherlands' economy into a recession in 2011 which continued in 2012 and 2013, with economic contractions of 1.1% and 0.2%, respectively. Then in 2020, the COVID-19 pandemic caused the economy to contract by 3.9% - its worst showing in recent history.

The domestic economy grew by an annual average of just 1.4% from 2010 to 2019.

The Dutch government recorded a budget deficit equivalent to about 0.9% of GDP in 2023, following deficits of 0.1% in 2022, 2.2% in 2021 and 3.7% in 2020, and surpluses of 1.8% in 2019, 1.5% in 2018, and 1.4% in 2017.

The Dutch government spent €2 billion (US$2.1 billion) more than it received in the first nine months of the year.

Recently, the European Commission revised its deficit forecast for the Netherlands to about 0.2% of GDP this year, compared to its earlier projection of 2%. However, the shortfall is expected to increase again to around 1.9% of GDP in 2025 and 2.6% in 2026.

"In 2024, the budget deficit is expected to be significantly smaller (0.2%) than projected in the Spring Forecast (2.0%) due to higher-than-expected revenue from taxes on income and wealth in the first two quarters of the year. Additionally, expenditure from budgetary funds earmarked for defense, infrastructure, and climate are lower than initially planned by the government," said the European Commission.

The country's gross public debt fell to around 46.8% of GDP in 2023, from 50.1% in 2022, 52.5% in 2021, and 54.7% in 2020. The current debt level is far below the permissible upper limit of 60% stipulated by the EU Stability Pact.

In the first three quarters of 2024, the country's public debt fell by nearly €12 billion (US$12.5 billion) to €470 billion (US$489.2 billion).

Public debt is set to fall further to about 43.3% of GDP this year. While the government debt-to-GDP ratio is projected to increase slightly again to 44.3% next year and to 45.6% in 2026, it is still below the euro area average.

In November 2024, overall inflation stood at 4%, up from 3.5% in the previous month and far higher than the 1.6% in the same period last year.

Consumer prices rose rapidly during 2022, with overall inflation averaging 11.6%, the highest in recent history, mainly due to a surge in energy prices. Inflation eased to 4.1% in 2023 but remained far lower than the average of just 1.9% from 2000 to 2021. Inflation is projected to average 3.2% this year.

The labor market remains tight. Nationwide unemployment was 3.7% in November 2024, unchanged from the previous month but slightly up from 3.5% a year earlier, according to CBS. Joblessness averaged 7% from 2010 to 2017 before falling to 4.2% from 2018 to 2023.

There were about 372,000 unemployed people in the country in November 2024, about 4,000 lower than the previous month.

Sources:

• House prices up by almost 12 percent in November (Statistics Netherlands): https://www.cbs.nl/
• House prices up 11.5 percent in October (Statistics Netherlands): https://www.cbs.nl/
• Overview of the Dutch property market Q3 2024 (NVM): https://www.nvm.nl/
• Housing Market Monitor October 2024 (ABN Amro): https://assets.ctfassets.net/
• Dutch home sales prices show largest jump in two years, Up 12% to €462,000 (NL Times): https://nltimes.nl/
• Dutch National Mortgage Guarantee (NHG) (ABN Amro): https://www.abnamro.nl/
• Gross rental yields in the Netherlands: Amsterdam and 2 other cities (Global Property Guide): https://www.globalpropertyguide.com/
• Rented housing (Government of the Netherlands): https://www.government.nl/
• Rent increases the highest in over 30 years (The Hague Online): https://www.thehagueonline.com/
• Rental prices in the Netherlands see the highest increase in over 30 years (I Am Expat): https://www.iamexpat.nl/
• Consumer prices; rent increase for homes since 1959 (Statistics Netherlands): https://opendata.cbs.nl/
• Existing owner-occupied homes; sales prices price index 2020=100 (Statistics Netherlands): https://opendata.cbs.nl/
• More new-build homes sold in the second quarter (Statistics Netherlands): https://www.cbs.nl/
• Dwellings and non-residential stock; changes, utility function, regions (Statistics Netherlands): https://www.cbs.nl/
• Residential mortgages extended by Dutch MFIs to Dutch households, adjusted for securitizations (Month) (DeNederlandscheBank): https://www.dnb.nl/
• MFI household deposits and loans, interest rates (Month) (DeNederlandscheBank): https://www.dnb.nl/
• MFI households deposits and loans, volumes (previous structure) (DeNederlandscheBank): https://www.dnb.nl/
• Dutch economy grows by 0.8 percent in Q3 2024 (Statistics Netherlands): https://www.cbs.nl/
• Economic forecast for the Netherlands (European Commission): https://economy-finance.ec.europa.eu/
• Financial Stability Report Spring 2024 (DNB): https://www.dnb.nl/
• Netherlands Government Debt to GDP (Trading Economics): https://tradingeconomics.com/
• Inflation increases to 4.0 percent in November (Statistics Netherlands): https://www.cbs.nl/
• The Government spent €2 billion more than they received in the last nine months (NL Times): https://nltimes.nl/