The Netherlands’ housing market downturn continues

After almost a decade-long house price boom, the Netherlands’ housing market is now rapidly cooling, amidst falling demand caused by rising interest rates and aggravated by sluggish economic growth.

In Amsterdam, the capital, the price of existing homes fell by 5.68% in Q3 2023 from a year earlier (-8.05% inflation-adjusted), in sharp contrast to the strong y-o-y growth of 8.51% seen in Q3 2022, according to Statistics Netherlands (CBS). Nationally, house prices dropped 4.56% (-6.95% inflation-adjusted) over the same period – the third consecutive quarter of y-o-y decline and the biggest fall since Q3 2013.

Though quarter-on-quarter, house prices in the capital city increased by 3.55% (2.5% inflation-adjusted) in Q3 2023 while they were up slightly by 1.24% (0.21% inflation-adjusted) on a national level.

By property type, in Q3 2023:

  • Apartment prices fell by 4.47% (-6.86% inflation-adjusted) y-o-y in Q3 2023, in sharp contrast to the prior year’s 9.69% increase.
  • Terraced house prices were down by 4.24% (-6.64% inflation-adjusted), following a huge y-o-y increase of 11.62% in Q3 2022.
  • Detached house prices fell by 5.02% (-7.4% inflation-adjusted) during the year to Q3 2023 – after increasing strongly by 13.67% in the previous year.
  • Semi-detached house prices dropped by 4.89% (-7.28% inflation-adjusted), in stark contrast to a y-o-y increase of 12% in Q3 2022.
  • Corner houses saw an average price decline of 4.42% (-6.82% inflation-adjusted) y-o-y in Q3 2023, following an annual price increase of 11.25% in the same quarter in the prior year.

The 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%. House prices rose by just 1.2% in Amsterdam and by 2.5% in The Hague and declined by 1.2% in Utrecht.

HOUSE PRICES, ANNUAL CHANGE (%)
Year Nominal Inflation-adjusted
2008 1.70 -0.24
2009 -5.69 -0.24
2010 -0.80 -2.68
2011 -4.11 -6.38
2012 -6.90 -9.52
2013 -3.71 -5.27
2014 1.87 1.16
2015 3.27 2.56
2016 6.73 5.69
2017 8.25 6.91
2018 8.39 6.31
2019 6.48 3.66
2020 8.77 7.68
2021 19.60 14.17
2022 5.14 -5.49
Sources: Statistics Netherlands (CBS), Global Property Guide

Demand is falling. In the first eleven months of 2023, the total number of dwellings sold in the Netherlands fell by 5.2% to 162,838 units, following a 14.6% decline during the whole year of 2022, according to CBS.

The Dutch housing market is expected to gradually stabilize, but house purchases will remain low and will reach their lowest levels this year. “Owner-occupied homes are now almost as (un)affordable as they were in early 2022. For 2024, we expect home prices to match the 2022 peak and the number of sales to reach their lowest point,” said Rabobank Economic Research.

“The sharpest decline in sales is behind us and we expect the number of sales to bottom out in 2024. For 2023, we expect 183,000 sales, followed by 180,000 transactions in 2024. For 2025, we anticipate 184,000 sales,” added Rabobank.

The overall economy has slowed considerably. The Dutch economy grew by a minuscule 0.1% in 2023 from a year earlier, a sharp slowdown from strong annual expansions of 4.3% in 2022 and 6.2% in 2021, according to figures released by the DNB. The economy is expected to gradually improve, with projected real GDP growth rates of 1.1% in 2024 and 1.7% in 2025, according to the European Commission (EC).

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.

CHANGES IN AVERAGE HOUSE PRICES (%)
  Economic boom (Q1 96-Q2 01) Political instability, economic downturn (Q3 01-Q1 03) Economic recovery (Q2 03-Q2 06) Political instability, economic growth (Q3 06-Q4 07) Global financial crisis, eurozone debt crisis (Q1 08-Q4 13) Economic growth (Q1 14-Q4 19) Global pandemic (Q1 20-Q4 21) Economic recovery (2022)
Netherlands 104.4 4.7 15.3 3.8 -15.6 39.8 27.3 5.1
Groningen 100.1 8.7 16.9 2.9 -12.7 36.2 32.3 5.7
Zuid-Holland 98.9 3.3 16.1 2.2 -10.5 44.7 25.7 5.2
Noord-Brabant 107.9 5.8 13.6 3.8 -20.4 32.7 25.2 6.8
Amsterdam 131.6 -6.5 5.6 12.1 -17.7 77.4 20.0 1.2
Rotterdam 109.4 1.9 21.2 6.7 -11.9 61.8 26.5 4.1
Sources: Statistics Netherlands, Global Property Guide

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 remains 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. 

House prices started to fall in 2023, amidst rapidly rising interest rates and a slowing economy.

The Netherlands House Price Index in Major Provinces graph

Demand continues to fall

In the first eleven months of 2023, the total number of dwellings sold in the Netherlands fell by 5.2% to 162,838 units, following a 14.6% decline during the whole year of 2022, according to figures from CBS.

By dwelling type:

  • Apartment sales fell by 5.6% y-o-y to 37,060 units in the first three quarters of 2023, after declining by 7.7% for the whole year of 2022.
  • Terraced house sales dropped by 5.7% y-o-y to 45,552 units in Q1-Q3 2023, following a 13.6% decline during 2022.
  • Detached house sales were down by 11.4% y-o-y to 16,505 units over the same period, after a huge fall of 20.8% during 2022.
  • Semi-detached house sales dropped 7.1% y-o-y to 13,814 units, after falling by 15.7% in the full year of 2022.
  • Corner house sales declined by 5.2% y-o-y to 17,919 units in Q1-Q3 2023, following a 15.5% decline last year.

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 33 days in Q3 2023, slightly down from 34 days in the previous quarter but up from 27 days a year earlier, based on figures released by NVM.

“In recent years, the number of transactions of existing owner-occupied homes decreased significantly. This was mainly due to the lack of supply,” said Rabobank. “In 2022, the counter remained at 193,000 homes sold, 14.6 percent less than in 2021. It is noteworthy that the number of home sales has been declining at a much slower rate in recent months despite falling house prices.”

The Netherlands Number of Dwellings Sold graph

Residential construction activity weakens

In the first eleven months of 2023, dwelling completions in the country fell slightly by 0.1% to 67,077 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 34,502 housing units put up for sale in Q3 2023, down by 9% from the previous quarter and by 18% compared to the same period last year, according to NVM.

The total housing stock in the Netherlands reached 8,125,229 units in 2023, up slightly by 1% from the prior year. Single-family homes accounted for about 63.5% of total stock.

The Netherlands Dwellings Completions graph

Mortgage interest rates are rising rapidly

In November 2023, the average interest rate for new housing loans surged to 4.12%, sharply up from 3.23% a year earlier and 1.65% two years ago.

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

  • Floating rate and IRF up to 1 year: 5.12% in November 2023, far higher than the 3.36% in November 2022 and 1.61% in November 2021
  • IRF 1-5 years: 4.68% in November 2023, sharply up from 3.54% in the previous year and 1.63% two years ago
  • IRF 5-10 years: 3.94%, up from 3.3% in the previous year and 1.55% in the two years prior
  • IRF 10 years or more: 3.3%, up from 2.99% a year earlier and 1.75% two years ago

The Netherlands Interest Rates for New Housing Loans graph

For outstanding housing loans, the average interest rate was 2.53% in November 2023, slightly up from 2.32% in November 2022 and from 2.37% two years ago. 

Over the same period, by maturity:

  • Original maturity of less than or equal to 1 year: 5.29% in November 2023, sharply up from just 2.84% in the previous year and 1.88% two years ago
  • Original maturity of 1-5 years: 4.29% in November 2023, up from 2.78% in the previous year and 2.05% two years earlier
  • Original maturity of more than 5 years: 2.51%, slightly up from 2.31% in November 2022 and from 2.37% in November 2021

The Netherlands Interest Rates for Outstanding Housing Loans graph

New housing loans falling sharply

Because of rising interest rates, new housing loans drawn plummeted by 36% to just €73.03 billion (US$79.84 billion) in the first eleven months of 2023 as compared to the same period last year, based on DNB figures.