The housing market

House prices are rising less sharply

House prices have risen sharply since the summer of 2023, even by as much as 8.7% on average in 2025. One of the reasons for this rise was that household incomes increased while interest rates remained stable. Higher incomes mean people can borrow more to purchase a home. In addition, few new-build homes were completed, despite the significant housing shortage.

The rate at which house prices have been rising has gradually slowed down since the start of 2025. The conflict in the Middle East has caused mortgage rates to rise slightly and has led to greater uncertainty. We therefore expect the housing market to cool down further.

Twice a year, DNB publishes projections for the Dutch economy, including figures for the housing market. In our Spring 2026 Projections, the expected annual rise in house prices of 3% to 4% between 2026 and 2028 is considerably lower than last year. As consumer confidence falls and mortgage interest rates rise, people are both less willing and less able to borrow money to buy a home. There are also still plenty of properties coming onto the market, partly due to the wave of ex-rental properties being sold off.

First-time buyers find it hard to find a home

Homes in the Netherlands are too expensive for many, including first-time buyers, low- and middle-income earners and single people. This is because house prices have risen faster than people’s borrowing capacity. This has greatly worsened housing affordability since 2013. Even taking into account net household wealth, prices have risen faster, indicating a housing supply shortage. 

The figure below shows that we do not expect affordability for first-time buyers to deteriorate further in the coming years. This is because, by and large, borrowing capacity keeps pace with rising house prices. However, affordability remains historically poor, which means it remains difficult for many first-time buyers to obtain finance for their property.  

Too few homes are being built in the Netherlands

The number of new homes built has long lagged behind demand. As a result, the Dutch housing market remains tight, while the population and the number of households are expected to continue to grow in the years ahead. Higher interest rates and increased construction costs have made it more expensive to build homes, meaning fewer projects are getting off the ground. In addition, the shortage of skilled workers and nitrogen regulations are hampering the construction of new homes. If the Dutch housing market is to remain accessible, sufficient homes must be built in the coming years.

The government’s plans for more housing

In order to address the housing shortage and improve the functioning of the housing market, the government aims to add 100,000 new homes each year, two-thirds of which must fall into the affordable category, including 30% in social housing. In addition, there is a particular need for owner-occupied homes and privately financed rental properties.

Achieving this ambition requires not only sufficient building sites, nitrogen permits and skilled workers, but also substantial financial resources. We estimate that €40 billion will be needed each year to build those 100,000 homes. Around €6.4 billion of this amount should go towards the financing of new private rental properties, i.e. rental properties outside the social housing sector.

Financing for new private rental properties

The government plays a smaller role than it used to in the financing of new-build homes, including private rental properties. While housing construction subsidies rose to around 1.8% of gross domestic product (GDP) in the 1980s, current direct housing subsidies amount to just 0.1% of GDP.

That is why the government’s plans for more construction will only be feasible if market players invest sufficiently. Dutch institutional investors, such as pension funds and insurers, currently account for just over half of that financing requirement. In recent years, international investors have virtually withdrawn entirely from the Dutch new-build housing market. At the same time, private landlords have become more cautious, and are selling off more properties than they are buying in response to higher interest rates, changes to tax laws and stricter regulations on rental properties.

Solutions for the housing market

It is clear that the housing market is facing major challenges. We emphasise that addressing them will require a comprehensive, coordinated package of measures. Supply and demand must be brought into better alignment to improve the functioning of the market and reduce distortions.

The most important measures we propose are listed below.

Build more homes

In the coming years, a large number of new homes will need to be built, particularly more affordable rental properties in the private sector. The government must play a coordinating role. Properties like these offer an alternative for prospective first-time buyers who do not yet have enough money set aside to buy a house. They can save towards home ownership and avoid taking on excessive debt when finally taking the plunge.

Foster a more conducive investment climate

A better investment climate is needed if the plans for new-build private rental properties are to materialise. Investors need long-term policy certainty and less restrictive regulations. This goes for both domestic investors and their international counterparts. By providing greater clarity and predictability, the government can help to encourage more investment in new-build projects.

Avoid measures that stimulate demand

Supply and demand must be better aligned to improve the functioning of the housing market. The government should therefore exercise caution when introducing measures that increase demand for owner-occupied homes. Current schemes that stimulate demand could also be phased out gradually.

For example, reducing the tax incentives for home ownership would lead to a more equal treatment of owner-occupied and rental properties, which could make investment in rental properties more attractive in the long term. Restricting the special mortgage loans for first-time buyers is also an obvious step. Although these loans offer first-time buyers extra financial leeway, this mainly leads to higher house prices in a tight housing market as more potential buyers compete for the same properties.