Dutch home prices to drop 3% next year; Still unaffordable to many: Rabobank

Home prices will fall by 3 percent next year, and by another 1.5 percent in 2024, Rabobank expects. The bank has reservations about this making homes more affordable. The mortgage interest rate is very high, which means people spend more on a mortgage each month. And due to the increased cost of living, less money is left to purchase a home.

Rabobank believes that house prices will fall in all regions in the Netherlands. The most substantial decrease will be in Amsterdam, including the surrounding areas like Haarlem, Zaanstreek, and IJmond. Prices there will fall by about 4 percent next year, the bank expects. The smallest decrease will be in Zeeland, where home prices will stay almost the same as this year.

But the falling house prices will not automatically lead to more sales, partly due to the rise in the mortgage interest rates. “A higher interest rate means that people can borrow considerably less for a house compared to their income. And therefore can offer less,” explained housing market economist Carola de Groot. If they manage to get financing, people will have to pay more for their mortgages. “In the meantime, even two average annual incomes are insufficient to buy an average-priced home,” said De Groot. As a result, buying a home will remain out of reach for many first-time buyers.

The economist also expects demand to decrease in the housing market. Groceries and energy have become considerably more expensive, meaning people have less money to spend on a new home. “This will probably lead to an additional drop in demand. The dwindling confidence in the housing market is also depressing demand for owner-occupied homes. Various market indicators are now pointing in that direction,” De Groot said.

Rabobank expects that home sales will reach 188,000 this year, 38,000 less than last year. Even fewer homes will be sold next year, around 179,000. The number of transactions will pick up again in 2024. “We think that capital market interest rates will have fallen somewhat by then, which, in combination with the falling house prices, will also increase demand for owner-occupied homes,” said De Groot.