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The Dutch housing market experienced ongoing fluctuations in the last quarter, with notable changes in mortgage rates, house prices and sustainability initiatives. Additionally, key policy shifts and economic indicators signal potential challenges and opportunities ahead for investors, homeowners and renters alike.
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The Dutch housing shortage remains a pressing issue, with an estimated deficit of 401,000 homes as of Q3. Despite government plans to construct 100,000 homes per year, the gap is widening. The lack of available housing has kept demand high across all regions, especially in the four largest cities (G4) – Amsterdam, Rotterdam, The Hague, and Utrecht — where investor activity was notably higher than in other areas. Corporate investors were particularly active in these cities, purchasing 11% of all G4 homes, while private investors accounted for 3% of sales.
The number of new building permits rose by 28% in early 2024, following several years of declines. However, the current volume is still lower than pre-2023 levels, reflecting the need for sustained growth in permit issuance to meet the demand for housing. Newly built home sales increased by 34% in 2024-Q1, but remained below the average of previous years, while prices for newly built homes rose 1.4% compared to a 3.8% increase in existing home prices.
Despite wage growth, affordability remains a concern, particularly for first-time buyers who face competition from existing homeowners with substantial home equity. Affordability standards for 2025 will allow borrowers with less stable incomes to use their current earnings for underwriting, aiming to provide more flexibility in lending. Meanwhile, the affordability index saw a slight improvement over the past two years, yet high housing prices and interest rates continue to challenge new buyers.
Mortgage offer requests reached approximately 116,000 in Q3 2024, a 22.4% YoY increase, driven primarily by home purchases. The average mortgage offer amount rose to EUR 362,000, up 7.2% from Q3 2023, reflecting both higher demand and rising home prices. The popularity of the portability option has surged, with a 25.5% increase in Q3, as borrowers aim to capitalize on stable rates amidst interest rate uncertainty.
Mortgage rates experienced a slight decrease of 22 basis points (bps) on average across various fixed-rate periods, particularly affecting shorter fixed-rate mortgages. However, as of October, this downward trend slowed with rising Euro swap rates, creating additional volatility. Mortgage spreads increased by 27 bps QoQ in Q3 and 41 bps YoY, demonstrating the complex interaction between mortgage rates and external market conditions.
The Affordable Rent Act, enacted in July 2024, has contributed to a 38% drop in rental property availability year-over-year, particularly impacting smaller landlords, who face increased regulatory costs and municipal purchase restrictions. Larger investors remain in the rental sector but are less focused on mid-market rental properties, impacting availability for middle-income renters. Rent prices in the unregulated sector rose by 7.4% YoY to EUR 19.28 per square meter by Q3, with record lows in rental property availability further fueling this increase.
The adoption of sustainability measures has declined across all major categories in 2024, with demand for heat pumps down 44%, floor insulation by 50%, and solar panels by 53%. The Dutch Association for Sustainable Energy (NVDE) attributes this trend to reduced subsidies, uncertainties in net metering and the removal of gas tax incentives. They recommend reallocating the EUR 1.8 billion projected reduction in energy tax revenue by 2030 to boost energy efficiency for low-income households.
Compliance with energy labeling regulations has increased markedly since early 2022, with over 90% of mortgage applications in Q3 2024 including an energy label. This reflects heightened awareness and regulatory pressure for energy efficiency in housing transactions.
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.
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