Dutch housing and mortgage market Q1 2025

Main developments

The Dutch economy grew by just 0.1% in Q1 2025, marking a continued slowdown. Weaker consumer spending, lower investment, falling exports, and geopolitical uncertainty contributed to the deceleration. Inflation remained high at 3.7% in March, which continued to weigh on household purchasing power. The unemployment rate rose to 3.9%, its highest level since September 2021, while wage growth halted.

The housing market remained active with 51,407 transactions in Q1 2025, despite a 14% decrease from the previous quarter. The year-on-year increase of 16% indicates continued strong market activity. The number of homes for sale remained virtually unchanged, but the market tightness indicator rose to 2.3, indicating that buyers have slightly more properties to choose from than in previous quarters. Despite the slight slowdown, the market remains dynamic, with continued activity driven by the sale of buy-to-let properties, particularly in urban areas where these properties are in high demand.

House prices in Q1 2025 rose moderately, with the average purchase price reaching €467,873, up 1.66% from the previous quarter and 8% year-on-year. The price index showed a quarterly increase of 2.52% and a 4.41% rise since August 2024, reflecting ongoing price growth, albeit at a slower pace due to the impact of affordable rental properties in the transaction mix.

The mortgage market remained active, with total mortgage volumes reaching €37 billion, a 13.3% decline from the previous quarter but a 35.3% increase year-on-year. Mortgage applications increased by 7.2% QoQ and 23.4% YoY, showing continued strong demand. NHG-backed mortgages accounted for 33% of the total market.

Economic indicators

The Dutch economy grew by just 0.1% in the first quarter, continuing the slowdown in growth seen in recent quarters. This slowdown reflects weaker consumer spending, declining investment and lower exports. Inflation remains elevated at 3.7% in March. Unemployment, although rising to 3.9%, remains historically low. However, the economic outlook remains highly dependent on external factors, such as ongoing geopolitical uncertainties and potential trade disruptions.

Economics

The Dutch economy grew by just 0.1% in Q1 2025 compared to the last quarter of 2024, marking a continued deceleration. Over the last four quarters a muted economic development can be observed with growth rates of 0.4% in Q4 2024, 0.8% in Q3 2024, and 1.0% in Q2 2024. The sluggish growth can be attributed to several factors, including lower consumer spending, a decline in investments and a contraction in exports. Consumer spending has declined in recent months, contributing to the slowdown and highlighting a weakening in domestic demand. Government spending remains a key driver of economic activity, providing some support in an otherwise challenging environment.

At the beginning of the year, DNB projected economic growth of 1.5% for 2025 and 2026. At that time, potential problems with import tariffs and the latest data on the economic slowdown had not yet been taken into account. However, this outlook is highly dependent on external factors, in particular ongoing geopolitical uncertainties such as the war in Ukraine and the potential for trade tariffs with the United States. These risks could have a significant impact on the Dutch economy, potentially reducing growth to 0.4% by 2026 and increasing inflation by almost 0.5% in both 2025 and 2026. These factors highlight the vulnerability of the Dutch economy to global trade tensions and geopolitical instability, which could pose challenges to future growth.

Inflationary pressures remain, mainly due to rising housing costs and higher prices for goods and services. Inflation stood at 3.7% in March 2025, indicating continued upward pressure on prices. The labour market remains tight, but unemployment has risen to 3.9%, the highest level since September 2021. Meanwhile, nominal wage growth is showing signs of stalling, reflecting broader economic uncertainty. This combination of persistent inflation and stagnant wage growth is weighing on purchasing power.

The European Central Bank (ECB) has lowered interest rates by 25 basis points for the seventh time since June 2024, bringing the rate to 2.25% as of March 2025. The decision follows continued weak economic growth in the eurozone and aims to stimulate activity. However, risks persist, particularly around trade. The IMF recently downgraded its eurozone growth forecast, citing concerns over potential tariffs linked to current US trade policies. Although these tariffs have been delayed by three months, they may still disrupt trade and economic stability. Markets expect two to three additional ECB rate cuts in 2025, possibly reducing the rate to around 1.5% by September this year.

Labour market

The Dutch labour market shows signs of cooling in the first quarter of 2025, with the unemployment rate gradually rising from 3.7% in December 2024 to 3.9% in March 2025, the highest level since the end of 2021. However, this level of unemployment remains historically low. Although the market is less tight than in previous quarters, it still provides a degree of stability and job security for most workers. 

The slight increase in unemployment is mainly due to companies becoming more cautious in the face of rising interest rates and geopolitical uncertainties. Rather than large-scale layoffs, companies are opting to retain staff while adjusting working hours or holding off on new hiring. This trend is further highlighted in PwC's latest report, which states that a net 11.6% of companies plan to increase their workforce in 2025, down from 15.7% in 2024.

This caution is also reflected in a fall in the number of job vacancies, as reported by hiring platform Indeed. On 1 March 2025, the number of vacancies was over 12% lower than a year earlier, indicating a cooling labour market. The number of jobs also fell slightly, ending a period of more than four years in which the number of jobs had risen steadily. As reported by the CBS, the number of job vacancies fell by 7,000 over the past three months, while the number of unemployed rose by 16,000, suggesting less tightness in the labour market. This decline in job vacancies is particularly evident in industry and trade sector.

Wage growth continued, although at a slower pace than in previous quarters. Nominal wages under collective agreements rose by 5.5% YoY in March 2025, down from 6.4% in December 2024. Adjusted for inflation, real wages rose by just 1.8% YoY in March, reflecting a continued erosion of purchasing power gains seen earlier in 2024. This moderation in wage growth suggests a more balanced, albeit less dynamic, phase in the labour market.

Consumer purchasing power sentiment, which peaked at 89 in September 2024, has steadily declined to 80 in April 2025. This decline in sentiment highlights increasing pressure on the cost of living, despite relatively low unemployment.

Housing market

The Dutch housing market remained active in the first quarter of 2025, with transaction volumes stabilising after the exceptionally high levels seen at the end of 2024. While the number of homes for sale remained relatively stable, a slight easing in market tightness suggests that buyers have more options, partly due to continued sales by buy-to-let investors. House prices continued to rise, albeit at a more moderate pace.

Transaction volume and housing supply

The Dutch housing market remained dynamic in the first quarter of 2025, with 51,407 transactions recorded, a 14% decrease compared to the previous quarter. The decrease compared to Q4 2024 reflects the seasonal pattern typically seen at the start of the year, following the exceptionally high volume of transactions in December. Nevertheless, this year’s Q1 performance is notably stronger than Q1 2024, with a 16% increase year-on-year, indicating ongoing market activity despite a traditionally quieter period.

The number of houses for sale remained virtually unchanged compared to the previous quarter, increasing to 25,973, a 0.4% QoQ and 11.5% YoY increase. However, the market tightness indicator rose to 2.3, up from 1.8 in Q4 2024. This increase marks a shift from the tightening trend seen throughout 2024 and suggests that, on average, prospective buyers had more properties to choose from in Q1. The rise in the tightness indicator may reflect a temporary drop in demand following the unusually high volume of transactions at the end of 2024. It may also indicate that some potential buyers are postponing their search amid uncertain economic conditions or affordability concerns.

Buy-to-let investors have continued to sell properties, contributing to market activity. These small and relatively cheaper rental properties, mostly located in urban areas, are in high demand and sell quickly due to their affordability. This rapid turnover helps to sustain market activity without significantly increasing the overall housing supply. The rapid turnover of these properties has likely eased pressure on prospective buyers, contributing to the rise in the tightness indicator as many have already purchased homes, reducing competition for others still searching. According to the Land Registry, private landlords in the Netherlands own 355,000 rental properties, representing 4.4% of the total housing stock. The property sell-off is expected to continue unless there are significant government changes stimulating the buy-to-let market.

While the first few months of the year typically see a slowdown in housing market activity, the relatively strong transaction volume and stabilising supply suggest that momentum has carried over from the end of 2024. The continued high transactions volume is notable, as uncertainty in the global economy and declining consumer confidence usually have an impact on the housing market. However, this has not yet been observed in Q1 2025.

Sustainability and the housing market

Sustainability, particularly in relation to energy efficiency, has become an increasingly important issue in the housing market in recent years. Rising energy prices have made homebuyers more aware of the energy efficiency of the properties they are considering. As a result, we've seen a trend towards sustainability measures being implemented by both existing homeowners and buyers of new properties. The proportion of mortgage applications that include funding for sustainability measures has more than doubled since 2020. In addition, also around 85% of energy improvements are financed from homeowners' own funds. In addition, around 85% of energy improvements are still financed from homeowners' own funds.

Homes with higher energy labels, such as A+ or above, are generally more valuable and have experienced greater appreciation over time. Not only do these properties sell faster, but they also tend to attract higher offers and see significant increases in value. Therefore, sustainability improvements are not only beneficial for reducing energy costs, but also for increasing the market value of the property.

According to the NVM's "Energielabels op de woningmarkt" report, two-thirds of homebuyers now consider energy efficiency a crucial factor when choosing a property. Real estate agents have noted that energy labels are increasingly being prioritised by homebuyers, with many asking about the possibilities and costs of upgrading a properties sustainability features during viewings. Sustainability is also being discussed more frequently by mortgage advisers, further highlighting its growing importance in the market.

Correlation between better energy labels and property value

The value of a home is influenced by many factors beyond its energy label, including property type, construction year, quality, and location. For example, homes with higher energy labels (A and above) tend to be newer, often located in larger cities where they generally perform better in the housing market. In contrast, homes with lower energy labels (such as G) tend to be older, detached homes in smaller municipalities. 

In order to accurately isolate the impact of energy labels on property prices, we consider the property valuation model developed by Brainbay, a subsidiary of the Nederlandse Vereniging van Makelaars (NVM) . Their automated valuation model incorporates over 100 features, such as property characteristics (e.g., size, type, condition, year of construction, location) and additional market data to estimate property values. By using this comprehensive dataset, the model can estimate the impact of different energy labels on a property’s value while controlling for these other variables. This approach allows for a more precise measurement of the value added by a greener energy label, as it isolates the effect of energy labels from other property attributes.

Homes with greener energy labels are not only more valuable, but their market value has also risen faster in recent years. The graph below illustrates the development of home values from 2021 to early 2024. Since 2021, homes with an energy label of A or higher have increased in value by 23%, while homes with a G label have seen a much lower increase of 7%.

In early 2021, the value difference between a home with a G label and one with a label higher than A was relatively small, around 200 euros per square meter. However, by 2022 and beyond, this gap started to widen rapidly. This shift can be attributed to the sharp rise in energy prices, which, alongside increased energy costs, heightened consumer awareness of the sustainability of homes. As a result, homes with greener labels became increasingly appealing to buyers, as reflected in the value index.

Mortgage interest rates and spreads

The 10-year EUR swap rate rose sharply between late 2024 and mid-March 2025, driven by a significant rise in US government bond yields and higher than expected US inflation figures. This led to speculation that the Federal Reserve would keep interest rates on hold for longer, putting upward pressure on global interest rates. As a result, Dutch mortgage lenders raised their rates accordingly, with rates rising by around 25 basis points. By mid-March, swap rates had fallen and mortgage lenders had reduced their rates slightly, leading to a widening of mortgage spreads. Overall, mortgage spreads remained relatively volatile during the quarter, mainly due to the uncertainty in the financial markets and the slower reaction of mortgage lenders to changes in swap rates.

Annex I: Key indicators

Definitions