DNB Annual report 2022 - housing market| De Nederlandsche Bank

For years, finding a house has not been easy. House prices had been rising for a long time until last year, and rental homes are scarce. That is why we have presented proposals for more housing construction and more equal taxation for renters and homeowners. The main reason why house prices are so high is that people could easily borrow money to buy a home. And that was because interest rates were very low for a long time, and because the government decided to continue various measures that encouraged borrowing. These measures include tax benefits for existing homeowners and a tax cut for first-time buyers.

House prices are falling

The tide appears to be turning. Since about mid-2022, house prices have been falling. Mortgage interest rates have risen sharply and people are more cautious about major purchases. This is why we expect house prices to continue to fall this year and the next.

No major problems

If your house suddenly drops in value, you may have a problem. At the lowest point of the previous housing market crisis, some 3 in 10 homeowners had a mortgage debt that was higher than the value of their house. At this point in time, we expect fewer people will be affected by this problem, however. Even if prices should fall by 20%, only 1 in 12 homeowners will have a mortgage debt that is higher than the value of their house. And banks are not likely to get into trouble either. They are in good financial shape, so they are not likely to run into problems if people can no longer pay their mortgages. Finding a house remains difficult for first-time buyers, however, even if the steep price increases have come to an end. This is because house prices respond only slowly to interest rate increases. If you take out a mortgage now, however, these higher interest rates mean your monthly payments will also be higher. This has a negative impact on housing affordability in the short term.

Installing insulation and saving energy

A second big development in the housing market is that homes are being made more sustainable. In the winter of 2022-2023, Dutch people started reducing their energy consumption en masse, mainly because gas and electricity became much more expensive. They are also investing heavily in solar panels, insulating glass and other insulation measures.  In a news release we noted that it is difficult for renters to take energy-saving measures, while they are also the ones who have the most difficulty paying their energy bills. We therefore urge the government to help the most vulnerable groups with energy-saving measures and paying their energy bills first.

More information

Read more about the housing market and our recommendations for solutions.