The collapse of the Dutch coalition government in June 2025 has brought housing policy developments to a halt, delaying proposed reforms to rent regulations and creating uncertainty for housing corporations. At the same time, the housing market remains under pressure: transaction volumes and mortgage applications continue to rise, while the pace of new construction and permit issuance falls short of what is needed to meet structural demand.

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House prices continue to climb as supply gap widens

Dutch house prices rose 9.7% YoY and 1.8% QoQ in Q2-2025, following a 10.9% annual increase in Q1. Transaction volumes were also up, with nearly 57,000 homes sold in Q2 – an increase of 11.5% QoQ and 19.8% YoY. Price growth was strongest in rural provinces like Drenthe (+13.4% YoY), while Amsterdam saw more modest gains (+4.3%) as former rental properties increasingly entered the market. In the four largest cities, 40% of all home sales in Q2 were former rental homes.

Construction volumes fall short of targets

Despite growing demand, housing supply continues to lag. Only 33,300 building permits were issued in the first five months of 2025, compared to 38,500 in the same period last year. The number of completed homes remains well below target: just 22,500 were delivered in the first four months of 2025, falling more than 10,000 short of what’s needed quarterly to meet the national goal of 100,000 homes per year. Additionally, the number of withdrawn permits rose by 14.5% YoY, pointing to increasing developer uncertainty.

Mortgage originations up; average loan size reaches a new high

In Q2-2025, mortgage inscriptions rose to EUR 41 billion, a 17% increase from the previous quarter and 29% higher YoY. Mortgage applications remained robust, especially in the four major cities, where purchase-related requests rose to 24% YoY. The average mortgage amount increased by 3% YoY, reflecting sustained price pressure. The average mortgage amount rose to EUR 372,400 (+3% YoY), as to be expected with an upwards trend in housing prices.

Mortgage rates decline; spreads tighten modestly

In Q2 2025, residential mortgage rates fell by an average of 15 basis points, reversing much of the Q1 increase. The largest declines were seen in 5- and 10-year fixed-rate terms, while longer terms dropped more moderately. Spreads narrowed slightly, tightening by 11 basis points quarter-on-quarter.

Buy-to-let mortgage rates also declined, down 10 basis points on average across most segments. Spreads widened for the 1-, 5-, and 20-year terms but tightened slightly for 10-year loans. In July, spreads narrowed across all BTL segments, continuing the overall easing trend.

Buy-to-let market under pressure as regulation and investor retreat tighten supply

The Dutch buy-to-let market continues to contract as private investors retreat in response to tax changes, stricter regulation and legal uncertainty over rent increases. Investor sell-offs surged in Q1 2025, especially in university cities, while first-time buyers capitalized – accounting for 62% of transactions in major cities.

Despite the sell-off, supply in the free rental market remains tight: Q2 saw a 36.4% drop in available listings and record-high rents, averaging over EUR 20 per square meter nationwide. Meanwhile, institutional landlords face setbacks in court over excessive rent increases, adding to hesitation in new investments. The mismatch between regulated rents and market values continues to distort pricing and discourage both high- and low-end rental development.

Policy instability clouds outlook

The fall of the coalition government has created a vacuum in housing policy. A proposed two-year social rent freeze was withdrawn, while planned reforms to the rental points system remain on hold. The recently passed Housing Supply Steering Act still awaits Senate approval. Meanwhile, housing associations have expressed concern over a potential EUR 47.4 billion investment shortfall – enough to build 181,000 new homes or upgrade 1.58 million existing ones.

Forecasts point to continued price growth in 2025 and 2026

Most major financial institutions project house price increases of 6 – 9% in 2025, followed by more moderate growth in 2026. Rising wages, expected declining mortgage rates and the persistent mismatch between supply and demand remain the main drivers.

Disclaimer

Dynamic Credit Partners Europe B.V. (‘Dynamic Credit’) is a registered investment company (beleggingsondernemingsvergunning) and a registered financial service provider (financiëel dienstverlener) with the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten). This presentation is intended for informational purposes only and is subject to change without any notice.The information provided is purely of an indicative nature and is not intended as an offer, investment advice, solicitation or recommendation for the purchase or sale of any security or financial instrument. Dynamic Credit may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented herein. Dynamic Credit cannot be held liable for the content of this presentation or any decision made by a third party on the basis of this presentation. Potential investors are advised to consult their independent investment and tax adviser before making an investment decision. An investment involves risks. The value of securities may fluctuate. Past returns are no guarantee for future returns.