Affordability Divide Widens Between Buyers and Tenants in Dutch Housing Market

Affordability Divide Widens Between Buyers and Tenants in Dutch Housing Market

A recent report by ABN Amro highlights a growing chasm in housing affordability between existing homeowners, private renters and first-time buyers in the Netherlands. While homeowners have seen their relative housing costs fall over the past few years, private sector tenants and young buyers are now spending a larger share of their income on shelter—especially in major cities.

Homeowners Gain, Renters Lag Behind

Between 2019 and 2025, the share of net income that homeowners allocate to housing dropped from roughly 20–28 percent to 17–25 percent, according to ABN Amro’s calculations. This improvement stems from two main factors:

• Stable mortgage costs: Low interest rates locked in for many homeowners have kept monthly mortgage payments relatively flat.
• Rising incomes over time: Homeowners generally experience steady wage growth, widening the gap between disposable income and fixed housing costs.

In practical terms, an average homeowner can now spend an extra 2–3 percent of their net income on other expenses such as education, leisure or savings.

Private Renters and First-Time Buyers Feel the Squeeze

The situation is markedly different for those renting privately or entering the market for the first time. ABN Amro reports that private tenants currently spend between 28–38 percent of their net income on rent—well above homeowners. For first-time buyers, the share remains stubbornly high and, in some big cities, has even increased since 2019.

Key drivers behind rising costs for these groups include:

1. Escalating rental rates: A tight rental market and strong demand push prices upward, disproportionately affecting young professionals and expats.
2. Soaring property prices: First-time buyers need larger down payments and face higher monthly mortgages with each passing year.
3. Smaller living spaces: To manage costs, many young households move into compact units, which—when measured per square metre—can be more expensive than larger apartments.

A Closer Look at Income Shares

Sources: ABN Amro Economic Research

Regional Variations and Urban Pressures

The affordability gap is most pronounced in the Randstad—Amsterdam, Rotterdam, The Hague and Utrecht—where both rents and purchase prices have climbed faster than incomes. In smaller towns or rural provinces, rental growth has been more moderate, giving tenants slightly more breathing room.

However, even outside the big cities, private tenants still face a higher income burden than homeowners. The limited supply of new rental homes and the growing appeal of urban amenities continue to fuel demand—and prices—nationwide.

Why the Gap Keeps Growing

ABN Amro economist Mike Langen notes several structural factors behind the widening divide:

• Income disparity: Households in owner-occupied properties generally have higher average incomes than those in the private rental sector.
• Equity requirements: First-time buyers must accumulate larger down payments, making homeownership a more exclusive prospect.
• Square-metre costs: By moving into smaller or older rental units, many tenants may pay less in total rent but end up spending more per square metre, masking the true cost of housing.

"The transition from renting to buying is becoming increasingly difficult," Langen warns. "High prices mean first-time buyers need more equity, and rental costs continue to outpace income growth for young households."

What This Means for Renters and Buyers

For private renters and aspiring homeowners, understanding these trends is crucial:

• Budget realistically: Factor in higher rent increases and potential price jumps in your long-term financial plans.
• Consider housing benefits: Look into huurtoeslag (rental allowance) if you qualify, to alleviate part of your monthly cost burden.
• Explore alternative locations: Smaller cities and suburbs may offer more affordable rent and purchase prices while still providing good connectivity.
• Build equity gradually: For buyers, start saving early for a stronger down payment and seek mortgage advice to lock in favorable rates.

Moving Forward: Policy and Market Solutions

Policymakers and housing providers are under pressure to bridge this affordability gap. Potential measures include:

• Accelerating construction of mid-range and affordable rental homes.
• Introducing incentives for landlords to offer longer leases at stable rent levels.
• Expanding financial support schemes for low-income renters and first-time buyers.

While some initiatives are already underway, the pace of change must pick up to prevent further widening of the divide.

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