Dutch home prices will climb 7.5% to average €520,000 next year: DNB

Dutch home prices will continue to rise next year and the year after. On average, around 520,000 euros will be needed for a new home next year, De Nederlandsche Bank (DNB) predicted. It pointed to the significant wage growth in the Netherlands, combined with falling mortgage interest rates and the continuing housing shortage. All these combined will lead to higher asking prices and even more overbidding on the housing market.

Since the dip in the spring of 2023, homes have already become considerably more expensive. For 2025, the experts at DNB predict a further price increase of 7.5 percent. In 2026, the increase will likely weaken slightly but still amount to more than 4 percent. With that, home prices in the Netherlands are rising much faster than in the eurozone as a whole.

According to the central bank, more building permits have been issued recently. New construction will help to reduce the shortage in the housing supply in the coming years. However, even more permits are needed for the government’s ambition to build 100,000 homes per year. That does not seem feasible in the short term, the DNB said on Friday when publishing new economic estimates.

According to the DNB, more new homes are not the only thing that is important to solve the problems in the housing market. The regulator also reiterated that the government should look at reducing homebuyers’ financing space, which is inflated by tax benefits like the mortgage interest deduction. These tax benefits only drive up home prices, according to the DNB. In addition, a well-functioning rental market is needed that could “function as a valve for the housing market.”

DNB did note that first-time buyers are unlikely to see their chances of buying a home deteriorate further in the coming years. The affordability of owner-occupied homes has declined sharply over the past ten years but is expected to remain stable in 2025 and 2026. This is because borrowing capacity is increasing at approximately the same rate as home prices.

That does not alter the fact that the situation for first-time buyers is very difficult, the DNB said. In order to buy a house for 520,000 euros next year, a household needs a gross annual income of approximately 106,000 euros. The central bank estimates that approximately 36 of households have that income or more. “Most households, therefore, need savings or other assets on top of a mortgage to buy a house.”