Housing Shortage and Wage Hikes to Drive 8% Home Price Growth in the Netherlands, ABN Amro Predicts

Introduction

The Netherlands’ housing market has demonstrated remarkable resilience amid global economic uncertainty. In its mid-year housing outlook, ABN Amro raised its forecast for 2024 home price growth to 8%—up from the earlier prediction of 7%. This revision underscores two dominant forces: an ongoing shortage of available homes and rising household incomes. As a result, both buyers and tenants are feeling the effects of tighter supply, shifting demand, and evolving investor strategies.

Growing Home Price Forecast

ABN Amro’s economists noted that Dutch home prices increased by 6.6% in the first five months of 2024 compared to the same period last year. Strong wage growth, a limited number of newly built homes and slightly lower mortgage interest rates have outweighed the headwinds from trade tensions and geopolitical concerns.

Key Drivers

Housing Shortage

The Netherlands continues to face an acute housing shortage, with new construction failing to keep pace with population growth and household formation. Over the past five years, the completion of newly built homes has lagged behind government targets. This persistent gap between supply and demand exerts upward pressure on prices in every region—from the Randstad conurbation to more rural provinces.

Wage Growth

Household incomes in the Netherlands have risen steadily, thanks to strong labour market conditions and collective bargaining agreements. Wage hikes mean prospective buyers have more borrowing capacity, which supports higher mortgage approvals and elevated price levels. In effect, greater spending power among first-time buyers and move-up homeowners has given sellers confidence to ask—and receive—higher prices.

Mortgage Interest Rates

After a period of rising mortgage rates, lenders in the early part of 2024 began to ease off on rate hikes. Although interest rates remain above the lows seen in 2021, the recent slight decrease has reduced monthly financing costs for homebuyers. This shift has made mortgages marginally more affordable, encouraging both owner-occupiers and investors to act.

Transaction Volume Surge

ABN Amro also revised its forecast for housing transactions in 2024, projecting a 12.5% increase instead of the previous 5% estimate. In the first five months, transaction volumes reached 90,000—an increase of 15.8% year-on-year and one of the highest levels in the past decade.

Many of these transactions stem from landlords selling rental properties. Investors appear to be realigning their portfolios in response to tax changes, regulatory uncertainty and capital gains prospects. As a result, more rental homes are coming onto the sales market, adding to transaction counts but reducing rental stock availability.

Implications for Tenants and Landlords

Renters and the Rental Market

With investor-owned properties being sold off, some tenants may face higher rents or displacement if the new owners reposition homes for owner-occupation. Prospective renters should prepare for increased competition and consider alternative options such as housing cooperatives or social housing (woningcorporatie) applications where eligibility allows.

Additionally, tenants should review rental agreements carefully and stay informed about rent cap regulations. While the Netherlands does not have absolute rent controls, rental increases in the regulated (social) sector are tied to inflation indices and capped by law.

Landlord Sales of Rental Properties

For private landlords, the sale of rental homes can be an opportunity to realise gains amid rising property values. However, there are tax considerations—such as box 3 wealth tax on investment properties—that may affect net returns. Landlords should also factor in potential reinvestment options and the long-term outlook for rental yields, which could moderate if home prices continue to outpace rent growth.

Forecast for 2025 and Beyond

Looking further ahead, ABN Amro maintains a more subdued outlook for 2025 and 2026. The bank expects home prices to grow by 3% in both years, reflecting anticipated slower wage increases and stable mortgage rates. Transaction volumes are also forecast to cool, rising by just 1% in 2026 as the wave of investor sales subsides.

This deceleration suggests a gradual rebalancing of market dynamics. Supply may improve as more homes complete construction, while demand could stabilise if income growth and financing costs align more closely.

What This Means for Renters and Buyers

For renters, the immediate challenge will be navigating a tighter rental market, especially in popular cities like Amsterdam, Rotterdam and Utrecht. Those seeking long-term stability may consider exploring social housing, huurtoeslag (housing allowance) eligibility or cooperative living arrangements.

Homebuyers, on the other hand, need to factor in continued price growth and plan their finances accordingly. Securing a mortgage pre-approval early, understanding all associated costs (e.g., transfer tax, notary fees) and working with a knowledgeable mortgage advisor can help manage affordability risks.

Conclusion

ABN Amro’s updated forecasts underscore the Netherlands’ housing market resilience and the profound impact of structural factors like housing shortages and wage growth. While the pace of increase may slow after 2024, the next few years will remain critical for tenants deciding on rental versus purchase, and for landlords weighing retention against sale.

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