Dutch housing and mortgage market Q4 2024

The Dutch economy demonstrated strong performance in the fourth quarter of 2024, driven by a tight labour market and rising wages, which supported consumer spending. While inflation remained elevated, it showed signs of easing in early 2025.

The housing market remained highly active, with transaction volumes reaching their highest level in two years, driven in part by the continued sell-off of former rental properties. First-time buyers played a key role, with 25 to 35-year-olds accounting for 46% of total transactions—the highest volume for this age group in over three years. House prices stabilised in the fourth quarter but are expected to rise further in 2025, albeit at a more moderate pace than in 2024.

Main developments

The Dutch economy continued to perform well in the fourth quarter of 2024. Inflation remained elevated at 3.9% in Q4, significantly above the Eurozone average, driven by strong consumer demand, higher wages, and rising rental prices. While inflation showed signs of easing in early 2025, global uncertainties—such as potential trade conflicts and geopolitical tensions—could impact economic stability in the coming months.

The housing market continued to be highly dynamic, with 59,928 transactions recorded in Q4—up 11% QoQ and 19% YoY. First-time buyers continued to play a dominant role, with 46% of total transactions in December coming from buyers aged 25 to 35, marking the highest transaction volume for this group in more than three years. The sustained exit of buy-to-let investors, particularly in major cities, has led to an increasing supply of former rental properties, creating more opportunities for first-time buyers.

Mortgage lending expanded further in Q4, with total mortgage volume reaching €42.67 billion, up 13.2% QoQ and 34.4% YoY. The increase was driven by both higher transaction volumes and rising house prices, which pushed up the average mortgage amount. NHG-backed mortgages accounted for 32% of the market, although eligibility for NHG remains limited in higher-priced urban areas. Meanwhile, first-time buyers relied more heavily on own capital contributions, which have risen by approximately 80% since 2019, as intergenerational wealth transfers may have played an increasing role in supporting homeownership among starters.

Mortgage interest rates remained relatively stable throughout the fourth quarter. However, early 2025 brought renewed volatility, with rising inflation concerns following the U.S. presidential election. The 10-year EUR swap rate climbed by approximately 60 bps between December and January, prompting lenders to raise mortgage rates before swap rates partially stabilised by the end of January.

Economic indicators

The Dutch economy remained resilient in Q4 2024, supported by strong household spending and a tight labour market. While growth remained modest, rising wages continued to drive consumption, sustaining economic momentum. Inflation persisted throughout the fourth quarter but eased to 3.3% in January 2025, as falling energy prices reversed the upward trend seen in December.

Economics

The Dutch economy continued to perform well in the fourth quarter of 2024, supported by a tight labour market, rising wages, and strong household spending. Unemployment remained stable at 3.7%, while nominal wage growth under collective labour agreements averaged 6.5% in Q4, slightly lower than 6.9% in Q3. Despite this moderation, rising incomes continued to support consumption, helping to sustain economic resilience. Total GDP growth for the year is expected to reach 0.9%, marking a modest but steady recovery following nearly two years of stagnation.

Looking ahead, De Nederlandsche Bank (DNB) expects the Dutch economy to grow by 1.5% in both 2025 and 2026, driven by strong domestic demand, wage growth, increased investments, and higher government spending. However, according to DNB, global uncertainties—such as ongoing geopolitical tension, supply chain disruptions, and potential trade conflicts—could lead to financial market volatility, slower economic growth, and continued inflationary pressures.

A key risk is the potential for a global trade war, particularly as U.S. President Donald Trump has already moved forward with import tariffs and signalled the possibility of further measures. This could trigger supply chain disruptions, retaliatory tariffs, and rising inflation, significantly affecting Dutch exports and overall economic performance. In this scenario, growth could slow to just 0.4% in 2026. The DNB emphasizes that escalating trade tensions would be especially challenging for the Netherlands as an export-driven economy.

Inflation

Inflation climbed further in the fourth quarter of 2024, averaging 3.9%, up from 3.6% in Q3. The overall inflation rate for 2024 stood at 3.3%, notably higher than the Eurozone average of 2.4%. The primary drivers of Dutch inflation in 2024 included strong consumer demand, substantial wage growth, and rising rental prices. Additionally, recent tax hikes on goods such as tobacco and hotel accommodations added upward pressure on prices, while food costs remained high due to global supply chain disruptions and rising agricultural expenses.

However, in January 2025, inflation dropped to 3.3%, its lowest level since mid-2024. This decrease was largely driven by a renewed drop in energy prices, which fell by 1.4%, reversing the upward trend observed in December. While this is a positive development, inflationary pressures remain elevated compared to the rest of the Eurozone.

Looking ahead, DNB forecasts Dutch inflation at 3.2% in 2025 and 2.8% in 2026, remaining above the ECB’s 2% target. DNB Executive Director Olaf Sleijpen has cautioned that while a 3% inflation rate is not an immediate concern, it must not become entrenched in household and business expectations, as this would make it more difficult and costly to control. With limited room for additional ECB monetary policy interventions, he stresses the importance of coordinated efforts from unions, employers, and policymakers to prevent inflation from stabilising at elevated levels.

Geopolitical risks remain a key factor. If U.S. President Donald Trump proceeds with his proposed high import tariffs, a global trade war could significantly disrupt Dutch exports and investments, potentially raising inflation by an additional 0.5% and further straining consumer purchasing power.

Figure 1: Inflation in the Netherlands, end of September 2024 (Source: CBS)

Housing market

The Dutch housing market remained active in Q4 2024, with rising transactions partially driven by first-time buyers and the sell-off of former rental properties. While house prices stabilised slightly, strong demand and supply shortages are expected to sustain growth in 2025.

Transaction volume and housing supply

The Dutch housing market saw a sharp rise in transaction volume in Q4 2024, with 59,928 transactions, marking an 11% increase compared to Q3 and a 19% increase year-on-year. The most notable surge occurred in December, with 23,824 transactions, the highest monthly total in at least two years. This sharp increase suggests a combination of seasonal effects and first-time buyers taking advantage of the growing supply of former rental properties on the market. This continued upward trend resulted in a total of 206,460 transactions in 2024, a 13% increase compared to the 182,403 transactions recorded in 2023.

Despite the rise in transactions, the number of houses for sale at the end of Q4 increased slightly to 25,877, representing a modest 0.9% increase compared to Q3. However, the market tightness indicator dropped further to 1.8, down from 2.1 in Q3 and 2.4 in Q2, indicating that demand is outpacing supply, with more buyers entering the market and competing for fewer available homes.

Figure 2: Number of transactions and market tightness, end of December 2024 (Source: CBS / Land Registry / NVM)

First-time buyers continued to dominate the housing market in Q4 2024, with the group of 25 to 35-year-old buyers recording the highest number of transactions. In December alone, this group recorded 10,960 transactions, representing 46% of total transactions and marking the highest transaction volume for this age group in more than three years.

Figure 3: Market share of transaction volume by age group, end of December 2024 (Source: CBS)

The strong increase in first-time buyer transactions is largely driven by changes in rental market conditions. New taxation rules and a rental control point system introduced in July 2024 have further limited returns on mid-market rentals, encouraging investors—mainly consisting of private landlords—to sell their rental properties. Following significant sell-offs in the second and third quarters, buy-to-let investors continued to exit the housing market in the fourth quarter. The Land Registry (Kadaster) reported that almost half of all homes sold went to first-time buyers, with many of these properties coming from former rental stock, particularly in major cities.

At the same time, this exit of private landlords has reduced the availability of mid-market rental properties, increasing competition. In Q4 2024, the average rent in the private sector increased by nearly 8% YoY, reaching €1,730 per month, according to rental website Pararius. While the overall rental stock has remained stable due to new construction by institutional investors, much of this new supply has been concentrated in the higher-end segment, providing little relief for tenants seeking mid-market housing. As a result, rising demand for affordable rental properties continues to push up prices, making homeownership a more attractive alternative for young buyers—especially as more former rental properties become available for purchase.

New construction and housing shortage

According to ABF Research (Primos 2024), the Dutch housing shortage stood at 401,000 homes in 2024 and is expected to peak at 411,000 in 2025 before gradually declining. However, given the current pace of construction, which remains below target, and ongoing population growth, particularly due to migration, a decline in the housing shortage is unlikely in the near term. Furthermore, the mismatch between supply and demand continues to exacerbate the shortfall. While the number of single-person households is rising, many new developments are still geared towards larger family homes, limiting access to affordable housing for first-time buyers and middle-income earners.

In Q4 2024, an estimated 18,144 new homes were built, bringing the total for the year to around 67,965—a 7.4% decline compared to 2023. When including housing transformations, the total number of newly available homes reached approximately 71,837, remaining well below the government’s annual target of 100,000. Building permits also dipped, with around 16,484 permits issued in Q4, contributing to a total of 63,767 in 2024—a 15.3% drop from 2023. Slower permit approvals cast uncertainty on the pace of future construction.

House prices

House prices remained strong in Q4 2024 but showed signs of moderation compared to the sharp increases earlier in the year. The average purchase price declined slightly from €463,472 in Q3 to €462,251 in Q4, marking the first quarterly drop since early 2023. This decline became more pronounced towards the end of the quarter, with December recording an average price of €457,467. Despite this drop, house prices still recorded a year-on-year increase of 8.3% compared to December 2023. The slowdown in price growth can largely be attributed to the continued sell-off of buy-to-let properties, which are generally in the lower price segments. As a result, the changed transaction composition in Q4 led to a modest decrease in the overall average purchase price, despite continued demand for owner-occupied homes.

Competition remains most intense in the lower price segment, where demand continues to outpace supply. Buyers in this segment overbid by an average of 6.2%, compared to 3.6% in the mid-market (€450,000 - €1,000,000), while in the higher-end market (above €1,000,000), underbidding increased to an average of 1.9%, up from 1.1% in Q3. The stronger overbidding in the lower price segment reflects where market demand is most concentrated, particularly among first-time buyers and households seeking more affordable housing options. While some market observers have pointed to signs of a cooling market, such as a slight decline in overbidding and an increase in price reductions, these developments are relatively minor in the broader context of continued price growth and strong transaction volumes. However, it will be important to closely monitor whether these early signs of moderation become more pronounced in early 2025.

Looking ahead, house prices in 2025 are expected to continue to rise as the market stabilises and the transaction mix returns to a more typical balance. The recent influx of lower-priced former rental properties has temporarily weighed on average purchase prices, but as this effect fades and transaction patterns normalise, price growth is likely to resume. However, the pace of increases is expected to moderate compared to the rapid gains seen earlier in 2024, aligning more closely with wage growth. In addition, affordability constraints for first-time buyers are becoming increasingly tight, which could further slow the pace of price increases. According to the Land Registry, private landlords in the Netherlands own approximately 355,000 rental properties, representing 4.4% of the total housing stock. This suggests that some of these properties may still enter the housing market, and it remains uncertain when the transaction mix will fully normalise.

Figure 4: Development of the house price index, end of December 2024 (Source: CBS & Land Registry)

Mortgage market

The Dutch mortgage market saw significant growth in Q4, driven by a sharp rise in housing transactions. First-time buyers were a key driver of activity, with own capital playing an increasingly important role in enabling them to compete in a heated market. The porting option also remained popular, accounting for 27% of total mortgage applications.

Mortgage volume and applications

The Dutch mortgage market saw continued growth in Q4 2024, with total mortgage volume reaching €42.67 billion, marking a 13.2% increase quarter-on-quarter and a 34.4% rise year-on-year. This growth was largely driven by a higher number of transactions, supported by the continued strong presence of first-time buyers, as well as rising house prices, which have led to higher average loan amounts. For the full year, total mortgage volume reached €88.3 billion, up 28.5% from €68.7 billion in 2023.

The porting option remains appealing to existing borrowers as mortgage rates stay relatively high. In Q4 2024, total ported mortgage volume based on applications rose to €9.5 billion, accounting for 27% of the total market. This remains in line with levels observed over the past 12 months. The preference for shorter fixed-rate periods (mainly 10 years) continues to dominate the market, still representing over 70% of new mortgage origination.

NHG-backed mortgages accounted for 32% of the market in Q4 2024. On 1 January 2025, the NHG limit was raised to €450,000, although this increase remained below the pace of house price growth. In addition, the NHG premium was reduced from 0.6% to 0.4%, making it more attractive. Despite these adjustments, NHG eligibility remains constrained, particularly in urban areas where property values often exceed the threshold.

Figure 5: Total vs. available mortgage application volume in € billions, end of December 2024 (Source: HDN)

The increasing role of equity

The trend of rising equity contributions among first-time buyers has been evident over the past five years. Data from HDN shows that first-time buyers have significantly increased their financial contributions when purchasing a home, as higher house prices and mortgage affordability constraints have required larger down payments.

In 2019, first-time buyers contributed an average of approximately €22,000 in own capital. By 2024, this amount had risen to approximately €40,000, representing an increase of about 80% and reflecting the growing need for higher down payments in a competitive housing market. In contrast, the increase in own capital contributions across the total mortgage market has been far more limited, rising just 5.7% from €26,265 in 2019 to €27,765 in 2024.

Dutch households have accumulated record levels of savings in recent years. By the end of 2024, total bank balances—including savings and current accounts—reached €600.5 billion, marking a 34.8% increase from €445.4 billion in 2019. This substantial growth was driven by higher disposable incomes and pandemic-induced saving habits.

As household wealth has increased, intergenerational wealth transfer has likely played a growing role in helping first-time buyers enter the housing market. Parents and family members may be more willing to share a portion of their accumulated savings to support younger generations, particularly as rising house prices have outpaced wage growth. With house prices continuing to rise and mortgage affordability constraints increasing over the years, own capital has played an increasingly crucial role in determining affordability and purchasing power. In a highly competitive market, additional equity is often necessary for first-time buyers to secure a home. This financial support helps explain why first-time buyers have remained a dominant force in the housing and mortgage market, despite ongoing affordability challenges.

Figure 6: Own equity contribution by first-time buyers, end of December 2024 (Source: HDN)

Mortgage interest rates and spreads

In Q4 2024, market interest rates remained relatively stable. Consequently, mortgage rates saw little fluctuations, and spreads of mortgages with a 10-year and 20-year fixed-rate period mortgages hovered around 160–170 bps.

However, early 2025 brought renewed interest rate volatility following the U.S. presidential election. President Donald Trump’s proposed tariffs—25% on imports from Mexico and Canada, and 10% on imports from China—raised concerns about potential new inflationary pressures. As a result, long-term interest rates rose sharply, influencing European swap rates. The upward trend began in December and continued into January, with the 10-year EUR swap rate climbing by approximately 40 bps. Mortgage lenders raised their mortgage rates in response, albeit with a small delay. Consequently mortgage spreads tightened somewhat. In the last week of January, financial markets showed signs of stabilisation, with swap rates declining by 20 bps.

Figure 7: Interest rates 10-, 20- and 30 years mortgages (10-day moving average), end of December 2024 (Source: DMFCO)

Figure 8: Spreads on 10-, 20- and 30 years mortgages (10-day moving average), end of December 2024 (Source: DMFCO)

Mortgage performance

The Dutch mortgage market continues to perform very well, with stable, low levels of losses and arrears. The Dutch National Credit Register (BKR) also noted a downward trend in their latest report on payment arrears on mortgages.

To provide a projection of losses for the upcoming year in the Dutch mortgage market, public mortgage loan data (European Data Warehouse) is used as input for stress tests in Moody’s Portfolio Analyser. The stress tests are based on different scenarios as described below.

In all scenarios, losses are expected to remain exceptionally low:

The baseline scenario (S0) assumes that Russia’s invasion of Ukraine continues but does not expand beyond Ukraine, and Israel’s conflict with Hamas does not escalate into an all-out regional conflict. Energy markets remain stable, with global oil prices near current levels and natural gas prices only slightly higher than pre-pandemic levels, supported by strong liquefied natural gas imports and continued Russian gas flows. Supply chain disruptions from the Red Sea and Panama Canal increase inflationary pressures slightly but do not cause shortages. The ECB continues gradual rate cuts, while fiscal policy shifts toward expansion despite higher borrowing costs. Economic growth remains moderate, with government consumption and disposable income gains driving recovery, though growth stays below potential until 2025. Unemployment rises marginally, inflation converges to the ECB’s 2% target by mid-2025, and financial markets remain calm. Structural challenges, including a declining workforce and low productivity, weigh on long-term growth.
The stronger near-term growth scenario (S1) assumes that the Russia-Ukraine war ends faster than anticipated as pandemic fears subside. These developments boost both aggregate demand and supply. On the demand side, recession concerns are alleviated, leading to improved consumer and business sentiment. On the supply side, improved energy security, the elimination of supply bottlenecks, and productivity gains driven by NextGenerationEU funding result in rapid economic growth. The strong economic performance reduces domestic political tensions, enabling effective reforms and investment.
The protracted slump scenario (S4) assumes the global economy fails to recover, with sentiment in the eurozone plummeting. The risk of the Ukraine conflict escalating into a NATO confrontation becomes acute, while tensions between the U.S. and China lead to significant barriers to shipping. Political risks in the eurozone increase sharply as populist parties exploit voter discontent. These geopolitical and economic risks trigger a severe sell-off in financial markets, plunging the economy into a deep recession.

[1]		Expected loss (in bps)			Annualised probability of default (in bps)
Horizon	Vintage	S0	S1	S4	S0	S1	S4
1Y	2023-11	0.20	0.17	0.39	3.33	3.25	3.85
	2024-08	0.17	0.16	0.20	3.22	3.18	3.34
	2024-11	0.25	0.25	0.29	3.24	3.21	3.36
Lifetime	2023-11	1.22	1.11	2.01	37.08	36.43	41.77
	2024-08	1.18	1.11	1.84	37.14	36.34	42.02
	2024-11	1.15	1.10	1.73	35.95	35.22	40.46

Please note that the Q4 data will be published in the second half of February.

For Q3 2024 we conclude that:

The performance of Dutch residential mortgages remains strong. This is most likely due to the healthy financial position of borrowers as a result of rising wages and the continued tightness of the labour market.

In general, the impact of economic developments over the past year has not led to significant changes in either the expected loss or the probability of default of the mortgage portfolio.

Please note that the 1Y and Lifetime horizons represent the expected impact of each scenario on the mortgage portfolio over the next year and until the portfolio matures, respectively. In addition, the scenario vintages are the scenarios as assumed by Moody's at the indicated time and are therefore based on the relevant economic dynamics at that time.

Annex I: Key indicators

Indicator

Q4 2023

Q1 2024

Q2 2024