Markets authority flags economic risks from 120,000 damaged homes and AI-driven markets
On Monday, the Dutch Authority for the Financial Markets (AFM) warned that economic shocks, rapid technological change, and geopolitical tensions are combining into what it called an “accumulation of risks” to the stability of the Dutch financial sector.
The AFM said the financial system is facing growing uncertainty in which shocks occur more quickly and increasingly reinforce one another. Chair Laura van Geest delivered the warning during the presentation of the Annual Report 2025.
“We are dealing with an accumulation of risks, while in the past, even one of these would have made us nervous. This has become our new normal: unpredictable, short, cyclical, and cumulative. In the coming period, we must be prepared for that. True stability lies not in trying to return to an old equilibrium but in our ability to navigate this unpredictability,” van Geest said.
The regulator cited developments surrounding Iran as an example of how quickly energy prices, inflation expectations, and market dynamics can shift.
The AFM said firms must strengthen resilience by improving risk detection and maintaining stronger buffers. It also called for stronger European coordination and regulation that can adapt to fast-changing conditions.
In a separate study also published Monday, the AFM highlighted risks facing homeowners, noting that 500,000 households in the Netherlands have vulnerable foundations. More than 120,000 homes require repairs, with an estimated total cost of 11 billion euros. For a typical homeowner, repair costs are reportedly 54,000 euros, with the average cost of 92,000 euros.
The AFM warned that delaying repairs can increase costs, lower property values, and raise the risk of residual debt when homes are sold, adding that foundation damage is not insurable.
The regulator set out four measures for stakeholders, including ministries, municipalities, lenders, and housing organizations. It called for better access to reliable property-specific foundation risk data, standardized risk information in valuation and financing, improved responsible financing options, and additional measures to close the financing gap.
In the meantime, the AFM also reported on Monday that artificial intelligence is improving efficiency in capital markets through faster analysis, lower costs, and better pricing but is also increasing systemic risks.
It stated that while self-learning systems can produce price patterns resembling coordinated behavior without any agreement between market participants, errors in one system can also spread quickly through the interconnected network.
