Increasing House Prices in Dutch Housing Market

Housing Prices Expected to Rise by 7.5 Percent in 2024

The housing market continues to show dynamic growth, with positive forecasts for 2024. ABN AMRO predicts a significant 7.5 percent increase in housing prices this year, followed by an additional 5 percent rise in 2025. This upward trend is primarily driven by wage increases and a gradual decrease in mortgage interest rates, which boosts the confidence of homebuyers, including expats looking to settle in the Netherlands.

For the third consecutive quarter, the sentiment in the housing market has improved. This positive outlook is mainly attributed to higher wages and declining mortgage rates, making it more attractive for potential buyers to invest in property. As a result, housing prices have reached record highs, completely offsetting the price declines experienced in 2023. However, affordability remains a concern, as the rapid increase in prices can still pose challenges for buyers.

Unexpected Rise in Housing Transactions: +10 Percent

The recovering housing market has also seen a surprising increase in the number of housing transactions. In the first five months of 2024, nearly 78,000 existing homes were sold, which is 9,000 more than during the same period last year. This 10 percent growth has led ABN AMRO to adjust its transaction forecasts upward. For 2025, a modest increase of 2.5 percent is expected.

Increased Borrowing Capacity and Transactions Due to Higher NHG Limit

First-time buyers, including expats entering the Dutch housing market, particularly benefit from the increased NHG (National Mortgage Guarantee) limit, which expands their borrowing capacity. Additionally, private landlords selling their properties contribute to the market's supply. The combination of lower mortgage rates and recovering housing prices also encourages existing homeowners to move up the property ladder.

Challenges in New Construction: Barriers and Prospects

Despite these positive trends, new construction lags behind. High land prices and limited capacity to connect new homes to the electricity grid are significant barriers. Nonetheless, there is a silver lining: more building permits are being issued. If this trend continues, the number of permits could be 25 percent higher in 2024 compared to 2023, potentially stimulating new construction in the long term.

Government Policy and Sustainability: Challenges and Uncertainties

The new coalition government is following the previous administration's path, but there remains uncertainty about the implementation of their plans. One potential change is that social housing rents may be linked to inflation rather than collective labor agreement wages starting in 2026. While this might ease the burden on current tenants, it could pressure investors and housing corporations' incomes, possibly leading to fewer investments in new rental properties.

Moreover, the current government policies lack measures to meet climate targets for the built environment. Budget cuts on sustainability initiatives and the lack of prioritization for electrifying the housing stock are concerning. Without additional funding to address the overloaded electricity grid, which causes congestion issues, new housing development could face further complications.

The Dutch housing market in 2024 is experiencing strong growth, with rising prices and increasing transactions due to positive economic factors such as wage increases and declining mortgage rates. However, challenges related to new construction and sustainability need attention from policymakers to ensure balanced and sustainable growth. With the right measures, these obstacles can be overcome, keeping the housing market robust in the coming years, providing expats with ample opportunities to find their ideal homes in the Netherlands.

Overall, buying a house is a big step, and can be especially challenging when you're an expat and living abroad. 

Hanno organizes a monthly webinar, where we will tell you all about the current status of the housing market in the Netherlands. Feel free to join this free and interactive webinar, and let us help you on your way.