Rising Wages Drive Dutch Home Prices Higher: What Buyers and Renters Need to Know

Rising Wages Drive Dutch Home Prices Higher: What Buyers and Renters Need to Know

The Dutch housing market is entering a new phase of heightened price pressure. In its latest forecast, ABN Amro predicts that average home prices will surge by 8.7% in 2025—up from the bank’s earlier 8% projection—and then moderate to 3% growth in 2026. Economists point to rising wages as a key driver, but a persistent shortage of supply and shifting investor behavior are also shaping market dynamics.

Whether you’re a prospective buyer, a current tenant, or a landlord, understanding these trends is essential for making informed decisions. In this article, we unpack ABN Amro’s outlook, explore regional disparities, and examine how wages, sales volumes, and housing supply will affect affordability and availability across the Netherlands.

ABN Amro’s Latest Forecast for 2025 and 2026

ABN Amro’s housing market team—led by economist Mike Langen—has revised its home price projection upward for 2025, from 8% to 8.7%. The forecast for 2026 remains unchanged at 3%. Key points include:

• 2025 price growth: 8.7% increase in average sales prices compared to 2024.
• 2026 price growth: 3% projected rise, reflecting slower wage growth.
• Home sales volume: Expected to climb by 12.5% in 2025, then slow to just 1% growth in 2026.

This acceleration in 2025 stems largely from higher disposable incomes, but next year’s moderation signals that wage growth will lose steam and housing demand may cool accordingly.

Why Rising Wages Fuel Higher Home Prices

Wage increases tend to boost consumers’ borrowing capacity. As take-home pay grows, Dutch buyers can qualify for larger mortgages under the National Mortgage Guarantee (NHG) scheme and other lending criteria. In turn, this bidding power exerts upward pressure on sale prices. Additional factors include:

1. Low mortgage rates: Although rates have edged up from historic lows, they remain relatively attractive compared to long-term averages.
2. Inflation: As the cost of living rises, real wages have managed to outpace inflation recently, preserving purchasing power.
3. Tight labour market: The Netherlands has seen strong employment figures, limiting unemployment and keeping income growth on an upward trajectory.

Together, these elements create a feedback loop: higher wages support stronger demand, which in a supply-constrained market translates directly into higher prices.

Sales Volume Trends: Investors Exiting the Market

In the first eight months of 2024, nearly 150,000 homes changed hands—16% more than the same period last year. A significant driver of this surge has been private landlords unloading rental properties. High taxes and stricter rent regulations, such as the points-based system governing permitted rental increases, have eroded profitability for many investors.

ABN Amro anticipates that the investor sell-off will largely stabilize by the end of 2025. As a result:

• 2025 sales increase: 12.5% year-on-year.
• 2026 sales increase: only about 1% as the wave of portfolio sell-offs recedes.

For buyers, this could mean slightly less competition from investors, but demand from owner-occupiers will remain strong if wage growth stays robust.

Regional Price Gaps Are Narrowing

One silver lining for housing affordability is the closing price gap between the Randstad (Amsterdam, Rotterdam, The Hague, Utrecht) and peripheral regions. Mike Langen notes that while major cities still command premiums, the fastest price gains have shifted to smaller towns and rural areas where supply is less strained.

This convergence suggests two things:

• Buyers priced out of city centres are seeking homes further afield.
• Developers may find new opportunities in regions where land and construction costs are lower.

However, even outside the Randstad, new listings remain scarce, and prices continue to climb—just at a comparatively slower pace.

Supply Challenges: Missing the 100,000-Home Target

The Dutch government set an ambitious goal of building 100,000 new homes annually to ease shortages. Yet recent data show permit issuances and completed units falling short. Key obstacles include:

• Lengthy planning and zoning procedures at the gemeente (municipal) level.
• Soil remediation and environmental assessments delaying project starts.
• Shortages of skilled labour and rising material costs driving up construction timelines and budgets.

With supply growth lagging demand, buyers and renters alike face an uphill battle. Until the pipeline of new homes strengthens, price and rent hikes are likely to persist.

What This Means for Renters and Buyers

For renters, slower income growth next year could squeeze budgets further if rents continue to rise. However, increased investor exits might lead some former rental properties to be converted to owner-occupied homes, potentially reducing rental stock in the near term.

Prospective buyers should:

• Get pre-approved for a mortgage early to lock in favourable terms.
• Explore emerging regions where price growth is moderating.
• Factor in transaction costs (transfer tax, valuation fees) and potential renovation expenses.

Landlords considering exiting the market should weigh the benefits of current sale prices against long-term rental returns, particularly if they qualify for tax breaks or can register units in the regulated sector.

Looking Ahead: Market Outlook for 2026

As wage growth moderates, ABN Amro expects a more balanced market in 2026 with:

• Slower price increases (3%).
• Flat sales volumes (+1%).
• Gradual easing of supply constraints if new construction accelerates.

Nonetheless, any significant policy changes—such as adjustments to mortgage lending caps or incentives for housing development—could alter this trajectory.

For renters and buyers navigating these shifting conditions, having access to comprehensive listings and expert advice is critical. Discover the easiest way to find your next home in the Netherlands by exploring Luntero.