The Dutch housing market shows a major housing shortage and house prices keep increasing, making it challenging for consumers to buy new homes.

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Consumer confidence is back to pre-pandemic level and consumers feel more optimistic about the general state of the economy. Meanwhile, there is an estimated housing shortage of 285.000 in the Netherlands and house prices keep increasing. Not only in the Netherlands, but in all of the Western world this trend is visible.

House prices increase and supply is tight

Dutch house prices increased 3.6% QoQ and 10.3% YoY this quarter, whereas previous quarter this was 2.0% QoQ and 8.8% YoY. On average, properties have been sold within 30 days, which is 9 days shorter than a year ago.

There are now approximately 18,000 properties for sale (-41.2% YoY) and supply has not been this tight since measurements started in 1995. This is a 31% decrease as compared to the previous quarter, which was already the lowest supply in 20 years.

Housing shortage high priority and challenging problem

With a shortage of 285.000 houses (ABF Research), the government acknowledges the Dutch housing market as a high priority issue. Although, to find an immediate solution is challenging. The Minister of Internal Affairs stated that between 2020 and 2030, one million new houses must be built, which translates to 100,000 new houses every year.

“The housing shortage arose due to consistently underestimating population growth, decreasing household sizes, pro-cyclical construction policies and decentralization of urban development.”

Jasper Koops

Increasing house prices in the Western world

While increasing house prices have been substantial over the past few years, this development does not only apply to the Dutch housing market. All around the Western world, house prices are increasing rapidly. This is generally attributed to lack of supply, cheap financing and high savings due to the pandemic, similar to the Netherlands. Extensive government and monetary support have mitigated negative impact on the income of (prospective) homeowners.

Mortgage spreads decreased across all major fixed rate periods

Mortgage rates have decreased and swap rates have increased, resulting in steep decreases in spread across all major fixed rate periods. The average spread decrease across major fixed rate periods and risk classes was 40 basis points in the first quarter of 2021.

Changes among fixed rate periods varied widely compared to the end of the previous quarter, with the biggest decrease in 30- year fixed rates (-54 bps) and the smallest decrease in 5-year fixed rates (-20 bps). Due to the decrease, spreads were roughly equal to bottom levels of the end of the first quarter of 2020.

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