First-time buyers still struggling on housing market; Few construction permits issued

First-time buyers are still having a very hard time in the housing market despite government measures to help them, according to mortgage advisor De Hypotheker. The housing shortage is keeping home prices high, and that will be a problem for years to come. Only 55,000 permits for housing construction were issued last year, the lowest number in years, according to Statistics Netherlands (CBS).

Over the past years, the government has taken various measures to help people starting out in the housing market. The mortgage guarantee limit rose from 405,000 to 435,000 euros, allowing first-time buyers to benefit from an interest discount of 0.5 percent. The threshold for transfer tax exemption also increased from 440,000 euros to 510,000 for first-time buyers who are under 35.

However, according to De Hypotheker, these benefits are regularly canceled out by the lower housing ratio - the percentage of your income you can spend on housing costs - land inking the loan amount to a home’s energy label.

“We are receiving signals from advisors that well-intentioned adjustments can lead to disappointment in practice,” Mark de Rijke, the commercial director of De Hypotheker, told AD. “In some cases, the amounts that first-time buyers can borrow are even lower than last year. The differences per home are sometimes enormous due to the extra financing space based on the specific energy label per home.”

Mortgage lenders can loan up to 50,000 euros more for homes with a high energy label. Those with a low label (E, F, or G) can get up to 20,000 euros more, but only if the extra amount is fully invested in sustainability measures. “First-time buyers do not want to or cannot pay the top price and are often in the market for a cheap home,” De Rijke said. “They are often less energy efficient. Then they have a double problem.”

Last year, 55,000 housing construction permits were issued in the Netherlands, 15 percent less than in 2022 and the lowest number since 2016, CBS reported. “The number of permits is an indicator of the number of homes that will be built in the near future,” CBS said. The average lead time from permit to completion is two years.

The Netherlands aims to build 100,000 homes yearly to solve the housing shortage. The permits don’t include homes created through converting other buildings.