Dutch house prices reached record levels again, new government presents ambitious coalition agreement.

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Spreads are still under pressure due to increasing swap rates, mortgage rates increased and are expected to keep increasing. Dutch house prices have reached record levels again and the new Dutch government has presented an ambitious, yet challenging coalition agreement.

Challenges for the new government

On 10 January 2022, the new Rutte-IV government was sworn in. The shared goals and objectives for the upcoming government term are laid down in a coalition agreement, which includes themes as combating climate change, improving health care and increasing equality of opportunity and the housing market.

However ambitious the plans of the new government are, some uncertainties and challenges should definitely be addressed. Although the reinstatement of a minister of Housing and Spatial Planning seems necessary, it is not certain if he will have enough power to accelerate the pace of the construction of houses. Also the availability of sufficient workers in the construction sector and concerns about whether climate adaptation is taken into account in choosing building locations, make the plans debatable.

A record increase of Dutch house prices, again

Dutch house prices increased with 3.9% over the last quarter and with 19.6% YoY, surpassing the previous YoY record increase of 17.5% in 2021-Q3. The number of properties transferred in 2021-Q4 is close to 53,000, which translates into a 2% decrease QoQ and a 21% decrease YoY.

“Most of the ten largest municipalities are expected to apply the purchase protection during the course of 2022 or have already done so.”

Jasper Koops

Buy-to-let update

Per the 1st of January 2022 the purchase protection (opkoopbescherming) has entered into force. This legislation allows municipalities to prohibit letting out properties which are purchased after a certain date without a permit. The intent of the legislation is to reduce the inflow into the rental market of properties that would otherwise be available for starters or middle incomes. Most of the ten largest municipalities are expected to apply the purchase protection during the course of 2022 or have already done so.

Rental prices

The average rental price per square meter has increased by 5.3% in 2021-Q4 versus the same quarter a year earlier. This is the largest YoY increase since 2021-Q4. The increase follows on four quarters of rental price decreases caused by the COVID-19 pandemic.

Mortgage spreads decreased across all major fixed rate periods

Mortgage spreads continued to decrease across all major fixed rate periods as swap rates increased more than mortgage interest rates. The average spread decrease across major fixed rate periods and risk classes was 7 bps during 2021-Q4. The average decrease was most pronounced for NHG (-9 bps) and 10-year fixed rate period loans (-10 bps). In comparison with 2020-Q4, spreads dropped significantly and are now on average 71 bps lower than a year before. The drop is even larger for high LTV and 30-year fixed rate period loans. After quarter-end, swap rates continued to rise, however more or less in parallel with mortgage rates. Further mortgage rate increases are expected in the near term.

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