The Dutch housing market remains buoyant with a YoY house price growth of 11.3%. Mortgage origination volumes also remain at historic highs, with a record first quarter volume of €39.8 billion.
With this quarterly update of the first quarter of 2021 we inform you about important developments in the Dutch housing and mortgage market.
Housing market remains buoyant
Impact COVID-19 on the economy
The accelerating house price growth seems counter-intuitive given the ongoing COVID-19 pandemic, which has resulted in prolonged lockdowns in the Netherlands and most of its major trading partners. However, the international trading system has proven surprisingly resilient, thanks to persistent government support measures. Although the Dutch economy has been negatively affected, the decrease in GPD was among the lowest of the EU countries.
Strong demand from house buyers
Unemployment decreased from 3.9% at Q4 2020 to 3.5% at Q1 2021. Consumer confidence has slightly brebounded after a strong decrease at the start of the pandemic, while the housing market confidence indicator has fully recovered, indicating a strong demand from house buyers. Demand is further fuelled by the structural housing shortage of over 330,000 homes and the historically low mortgages rates, which have resulted in good affordability for house buyers.
Transaction volumes high and number of houses for sale extremely low
Transaction volumes are high, with almost 67,000 houses sold in Q1 2021.This is the 2nd highest volume since 2005. Meanwhile, the number of houses for sale is extremely low with only ̴17,500 houses for sale in mid Feb-21. This is the lowest number since records began in 1995.
Strong performance existing mortgages
Performance of existing mortgages has remained strong, with a continued low level of arrears. Average LTVs of existing borrowers are decreasing due to the continued house price appreciation.
Dutch mortgages continue to offer an attractive return
After a sharp increase at the start of the pandemic, spreads on mortgages have decreased since Q3 2020. This decrease has been in line with general spread tightening in credit markets, where large availability of liquidity has driven down spreads on virtually all asset classes. Current mortgage spread levels are at the lower end of what we have observed over the last 6 years. Despite this, Dutch mortgages continue to offer an attractive return relative to their risks and relative to other asset classes.
Lenders on behalf of institutional parties increased their market shares
In Q1 2021 the 3 large domestic banks (Rabobank, ING and ABN AMRO) lost some of the market share compared to Q4 2020. However, together with smaller banks, which gained market share, their combined market share is still the major part of the market (56%). Besides the banks, lenders on behalf of institutional parties increased their market share as well. Despite strong competition, MUNT’s market share remained constant at 4% at the end of Q1 2021.
Download the quarterly update
Quarterly update Q1 2021 (PDF)
Sign up for our updates
Would you like to receive an e-mail as soon as the next update is ready? Then sign up with your email address.
Summary
Housing market remains buoyant
Impact COVID-19 on the economy
Strong demand from house buyers
Transaction volumes high and number of houses for sale extremely low
Strong performance existing mortgages
Dutch mortgages continue to offer an attractive return
Lenders on behalf of institutional parties increased their market shares
Download the Quarterly update Q1 2021 (PDF)
