Confidence in Dutch housing market falling as interest rates rise

Rising mortgage interest rates and increasing nervousness among buyers and sellers are leading to uncertain times in the Dutch housing market, Nieuwsuur reports based on figures from and conversations with various sources in the market.

Mortgage interest rates have tripled in the past six months. Consumer confidence in the housing market dropped to 87 in June, the lowest point since 2014, homeowners' association Vereniging Eigen Huis (VEH) said to the program. "People are becoming more reluctant to take out a mortgage," Hans Andre de la Porte of VEH said. "That makes sense given the economic conditions."

Rising mortgage rates significantly affect the costs involved in a new home. "If you had bought a house six months ago with net monthly costs of 1,000 euros, you would now have lost 1,200 to 1,250 net per month due to the increased interest for the same house," Nic Vrieselaar, a housing market economist at Rabobank, explained. "And if you also consider that energy prices are rising enormously, I can imagine that home buyers think twice before buying a house."

The rising mortgage rates also mean the maximum amount buyers can borrow is decreasing. “If you earn about twice the average with your partner, you could borrow about 420,000 euros at the beginning of the year. Now that is only about 375,000 euros,” Vrieselaar said.

The uncertainty among buyers makes sellers nervous, prompting them to put their houses up for sale. And bids are getting lower, according to data from the housing website Funda. In May, there were 40 percent more houses listed for sale than in May last year. The number of viewings decreased by 32 percent in the same month.

The cautious cooling of the housing market is also reflected in figures from mortgage advisor De Hyphoteker. In the second quarter of this year, the average mortgage amount fell for the first time in three years. In Q2 of 2022, the average mortgage was 322,000 euros, compared to 326,000 euros in the same quarter last year.

“If you hear in the news that the housing market is cooling down, if you see a lot of for sale signs in your neighborhood, then you may be more likely to put your house up for sale,” Vrieselaar from Rabobank said. “And if everyone does that, you also get a self-reinforcing effect downward.”