Dutch housing market continues to feel ripple effects of Iran war as mortgage rates rise
The war in Iran is pushing mortgage rates higher in the Netherlands and has coincided with a slight cooling in average home prices, according to Dutch Association of Realtors (NVM) data.
Economists and housing experts cited by NU.nl say the connection between the Middle East conflict and the Dutch housing market runs through global energy markets, inflation, and investor expectations, which quickly ripple through financial systems.
The broader conflict has tightened global oil and gas supplies to Europe and other regions. Within two days of the war’s start, fuel prices at Dutch pumps had already risen, driven by expectations of shortages among fuel suppliers. Airline ticket prices followed soon after, with higher costs spreading across more parts of the economy. As prices rise broadly, the purchasing power of money falls, Mike Langen, a housing market economist at ABN AMRO, explained.
Experts say the key mechanism begins in financial markets, where investors price not only current inflation but also expected future inflation. Oscar Noorlag, a mortgage expert at Van Bruggen, said, "Investors do not only look at current inflation but also at the inflation they expect. That makes it much more complex.” Because banks raise the money they lend to customers on financial markets, higher borrowing costs in those markets lead lenders to increase mortgage rates for consumers.
Noorlag warned that the duration of the conflict is key. “We will get through the current rise in interest rates. It only becomes a problem if the war lasts for months. Then inflation will increase sharply, interest rates will rise further, and fewer people will want to buy a home,” he said.
Peter Boelhouwer, a housing market professor at TU Delft, said the relationship between the war and Dutch mortgage rates is indirect. “Mortgage rates are not directly linked to the war in Iran but to how investors react to it, depending on supply and demand. And those financial markets are difficult to control,” he told NU.nl.
Recent figures from the Dutch Association of Realtors (NVM), released Thursday, show a cooling in average home prices. Langen said the trend is not solely tied to the Iran war, noting the data covers January through March, while the conflict began at the end of February.
Market reactions also vary by buyer type. Noorlag and Boelhouwer said first-time buyers remain active despite geopolitical uncertainty, while existing homeowners considering a move are more likely to delay their decisions. Boelhouwer pointed to similar behavior during the war in Ukraine, when first-time buyers continued searching while movers waited for interest rates to fall.
