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Dutch housing market prospects: strong sales and rising prices

Dutch Housing Market Quarterly

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  • Economic growth to continue in 2016 and 2017
  • Employment and household incomes rising
  • Mortgage rates expected to remain low         
  • House prices will rise in 2016 by 3½ to 5½% compared to 2015. In 2017 prices are expected to rise by 5 to 7%
  • The number of transactions will rise to between 190,000 and 210,000 in 2016 (from 178,000 in 2015) and between 200,000 and 220,000 in 2017
  • Regional differences are still marked. In the cities there are again considerable shortages in the market, while in rural areas the choice is still relatively good


Improvements in labour market and purchasing power positive for the housing market

GDP volume grew by 2% in 2015 compared to 2014. We anticipate economic growth of 2% again in 2016 and 2017 across all sectors. Rising purchasing power and employment are positive for domestic expenditure and the housing market.

Relatively sharp rise in sales and house prices

Growth in the first quarter of 2016 was higher than we had expected. Both sales (+24%) and house prices (+4%) rose relatively strongly compared to the first quarter of 2015. Underlying this, consumer confidence reached record heights and mortgage rates remained very low. We expect the number of sales this year to reach between 190,000 and 210,000, rising further in 2017 to between 200,000 and 220,000. It is therefore possible for the record number of 206,000 transactions achieved in 2006 to be exceeded.

The rise in the number of sales, in combination with a fall in the supply of homes for sale and the relatively low volumes of new homes, is causing growing shortages on the market. Together with rising incomes and low interest rates, this is pushing up house prices. This year we expect an average rise in the house price index of between 3½ and 5½%, followed by quite a sharp rise in 2017 of between 5 and 7%. In Amsterdam and Utrecht in particular, the affordability of owner-occupied homes will be put under considerable pressure from these price rises.

Mortgage rates fall further and will remain low for the time being

The number of mortgage approvals rose further in the first quarter of 2016. This rise is partly due to an increase in the number of transactions. However, the growth in total mortgage debt in 2015 remained limited as many households made extra mortgage repayments, and we expect to see this trend continuing in 2016 and 2017. Following many years of rises, mortgage payment arrears fell slightly. Mortgage rates fell further during the first quarter and are expected to remain low in 2016 and 2017. Should mortgage rates rise in the future, we do however expect households to be able to manage the increase in their mortgage outgoings.


Chapter 1: Economic background

The Dutch economy grew by 2% in 2015. This growth was widespread: alongside exports and private investment, for the first time since 2011 private consumption made a positive contribution to the growth in real Gross Domestic Product (GDP).

Table 1: Key figures for the Netherlands
Table 1: Key figures for the NetherlandsSource: Statistics Netherlands, Rabobank

For this year and next we anticipate ongoing and widespread growth in GDP of 2% (Table 1). Domestic expenditure will rise further and will be given an extra boost this year from temporary factors. These factors are expected to be withdrawn next year and so growth in domestic expenditure is likely to be lower. This will be compensated by a higher contribution made by international trade to the growth figures. Global uncertainties do however form a major downward risk to growth.

False start to private consumption

Household consumption was unexpectedly weak during the first months of this year. In fact, during the first quarter it hardly grew at all, or even fell. This was probably the result of a fall in car sales, which had experienced an end-of-year sprint during the last quarter of 2015 because of tax changes that came into effect on 1 January 2016. For the rest of 2016 we anticipate growth in private consumption. A variety of factors, such as low inflation, the EUR 5 billion tax reduction package and further growth in employment, will in fact cause real disposable household income to rise. The rise in purchasing power thanks to tax reduction measures will be felt mainly among the working population, the largest group of homeowners. The rise in purchasing power among this group may therefore act as a catalyst for home-related consumption.

Some of these expenditure incentives will cease in 2017. We expect that rising inflation will slow down the rises in real wages. The extra boost given to purchasing power by the tax reduction package will not occur again in 2017. Growth in private consumption next year, at 1½%, will therefore end up being slightly lower than the expected 2% in 2016.

Figure 1: Erratic trends in consumer confidence
Figure 1: Erratic trends in consumer confidenceSource: Statistics Netherlands

Just as household consumption, consumer confidence had a weak start to the year (Figure 1). The falling confidence index was mainly due to a decline in the ‘economic climate’ indicator, which may have been linked to the unrest on the financial markets, the uncertainty surrounding geopolitical tensions and the refugee crisis in Europe. The ‘willingness to buy’ indicator, usually a more significant predictor of household consumption, fell much more slowly. Most consumers still feel that it is a good time to make large purchases. The lower coverage ratio of pension funds, and consequently the greater likelihood of reductions in 2017, could well continue to dampen consumer sentiment somewhat during the coming months.

Unemployment falling thanks to growing employment

Unemployment fell from 7% in March 2015 to 6.4% in March this year (Figure 2). What is striking, though, is that in 2015 the group of persons unemployed for longer than 24 months still rose (Figure 3). The fall in unemployment can be attributed to growth in employment (Figure 2) which was largely accounted for by the private sector. It is also particularly noticeable that employment in the public sector and the healthcare sector did not fall further at the end of 2015. The fall in employment in these sectors will probably not be so marked as in 2015, as the heaviest blows caused by cuts and reforms have already been dealt.

We anticipate that the labour market will continue to recover. With economic growth picking up, a number of indicators such as a rise in the number of vacancies and hours worked through temporary agencies point to a further rise in employment. Falling unemployment will be slowed somewhat by a growth in the working population due to higher labour participation. On balance we expect a further fall in unemployment to an average of 6¼% and 6% in 2016 and 2017 respectively.

Figure 2: Steady increase employment
Figure 2: Steady increase employmentSource: Statistics Netherlands
Figure 3: Long-term unemployment still rose in 2015
Figure 3: Long-term unemployment still rose in 2015Source: Statistics Netherlands

Expected growth in exports surrounded by uncertainties

For this year we anticipate lower growth in exports than in 2015, due to slowing growth on the global markets and exports receiving less support from the falling value of the euro. Next year, growth among the Netherlands’ major trading partners will pick up again. This will be favourable for Dutch exports even though global uncertainties have increased, which means that in our view global markets pose greater risks (see also: Waar is de paniek op de financiele markten?, Dutch only). Should there be a strong global slowdown, the Netherlands, with its open economy, will also suffer and so the growth in exports may be less than we currently predict.

Chapter 2: The market for existing owner-occupied homes

Figure 4: Further rise in sales and house prices
Figure 4: Further rise in sales and house pricesSource: Statistics Netherlands, Land Registry, computation Rabobank

The housing market got off to a strong start this year. The number of sales in the first quarter of 2016 reached 42,897, almost a quarter more than in the first quarter of 2015. This has brought sales close to pre-crisis levels (Figure 4). As more homes are being sold and limit new homes are coming on to the market, the negotiating position of sellers is improving, which in turn leads to higher house prices. These have been rising slowly but surely since mid-2013 (Figure 4), even accelerating slightly at the start of the year. Compared to the first quarter of 2015, this rise was 4%. The strengthening economy, lower interest rates and high levels of confidence in the housing market all point to a sustained rise in the number of transactions and house prices.

2.1 National developments and expectations

Ongoing rise in sales

Figure 5: Best first quarter since 2007
Figure 5: Best first quarter since 2007Source: Land Registry, computation Rabobank

Following the catch-up growth in sales during 2014 (+39%) and further growth in 2015 (+16%) we had expected the growth in transaction numbers to level off this year. The relatively strong growth at the start of 2016 compared to last year (+24%) is therefore surprising. This growth figure, however, is somewhat flattering: during the first quarter of 2015 the number of sales of existing homes was somewhat lower than normal, due to the fact that up to the end of December 2014 households could make use of the temporary extension of the limit for tax-free gifts of € 100,000. This measure caused that the number of sales in the fourth quarter of 2014 was particularly high, and in the first quarter of last year lower. Even so, an annual rise of 24% is sizeable. During the last four quarters almost 187 thousand existing owner-occupied homes changed ownership (Figure 5, blue line).

Supply of owner-occupied houses falling

Figure 6: Number of houses for sale is falling
Figure 6: Number of houses for sale is fallingSource: Huizenzoeker.nl, Rabobank

The rise in the number of sales and slower growth in new supply means that the number of owner-occupied homes for sale is falling. In March of this year, more than twenty thousand fewer houses were for sale than in the same month last year. At present there are 148 thousand existing houses for sale in the Netherlands, which is still more than in 2009 when the crisis had just taken hold (Figure 6). 



Reduced supply on the market, selling times shorter

In order to measure the ratio between supply and demand, we use the shortage indicator, which divides the total number of houses for sale by the number of sales in a quarter. The resulting indicator gives an approximation of the number of choices a house buyer will have in a given period. The indicator fell from 16 in the first quarter of 2015 to 10 in the first quarter of 2016. This means that house buyers today have 38% less choice than last year.

At the same time, the historic data series by the Dutch Association of Real Estate Brokers (NVM) shows that the supply of owner-occupied homes is still reasonable compared to before the crisis. What’s more, there are considerable differences between the regions (see paragraph 2.2) and between segments. For example, there is still an ample supply of detached houses on the market, but for apartments we are seeing shortages again (Figure 7). The average time taken to sell a house, at least one hundred days, is still considerably longer than was normal before the crisis. On the other hand, it is a noticeable improvement on the 180 days when the market hit its deepest point in 2013 (Figure 8).

Figure 7: Still more supply on the market than before the crisis
Figure 7: Still more supply on the market than before the crisisSource: NVM, Rabobank
Figure 8: Average selling time slowly but surely becoming shorter
Figure 8: Average selling time slowly but surely becoming shorterSource: NVM, Rabobank

House prices rising considerably …

As the supply on the market falls, the negotiating position of sellers improves and sale prices rise. Figure 9 shows the very close relationship between these two factors. The Existing House Price Index (Prijsindex Bestaande Koopwiningen - PBK) of the Land Registry/Statistics Netherlands rose in the first quarter of 2016 by 1.1% compared to the fourth quarter of 2015 (seasonally adjusted, Figure 10). Compared to the first quarter of 2015 this was 4%, the sharpest rise since early 2008.

Figure 9: Relationship between house prices and shortages
Figure 9: Relationship between house prices and shortagesSource: NVM, Rabobank
Figure 10: Strongest house price rises in eight years
Figure 10: Strongest house price rises in eight yearsSource: CBS, Rabobank 

… but still quite a bit lower than before the crisis

Figure 11: Nominal and real house prices
Figure 11: Nominal and real house prices Source: Statistics Netherlands, Macrobond, Rabobank

House prices have risen by almost 9% since hitting their lowest point in June 2013. Even so, house prices are still 15% lower than at their peak in August 2008, and comparable with the level in 2004. If we take account of the rise in consumer prices during this period, real price falls have been as much as 24%. The real decline in capital tied up in homes for the group of households that bought their houses in and around 2008 is therefore still substantial. Only households that bought a house before 2000 and after 2013, have seen their real capital – excluding the repayments on the mortgage loan itself – grow on average (Figure 11).

Sales and price trends vary by segment

The rise in the number of sales and house prices varies according to the type of home. The recovery that has taken hold since mid-2013 has largely been found in the cheaper segment. Since a large number of homeowners moving up the property ladder are being confronted with a potential residual debt, more expensive houses such as end-of-terrace and semi-detached houses are lagging behind somewhat in this recovering market (Table 2). On the other hand, the market for detached homes has in fact experienced a slightly stronger rise in sales than the average. It is likely that the group of households that were able to buy in this segment did have the income and/or the financial resources to move up the property ladder into a generally more luxurious house.

Table 2: Trends in market share, sales and price per segment
Table 2: Trends in market share, sales and price per segmentSource: Land Registry, Rabobank
Table 3: Trends in market share, sales and price per segment
Table 3: Trends in market share, sales and price per segmentSource: Land Registry, Rabobank

As far as the price rises are concerned, we see that the homes that first-time buyers generally buy have risen faster in price, but in the second quarter the more expensive house types also recorded price rises on an annual basis (Table 2). Besides the still limited price rises in the more expensive segment, the fall in value in this segment during the crisis was also greater. As a result, the price difference compared to the market peak in 2008 for that house type is still relatively large (Table 3). This corresponds to the greater supply in that segment as described earlier (Figure 7).

Major factors for the market for owner-occupied homes in 2016 and 2017

The housing market made a strong start this year. Sales and house prices are on the way up. But using the knowledge we currently have, what can we say about the rest of this year and next year? Here follows an overview of the main factors.

Confidence in the market for owner-occupied homes

Figure 12: Confidence points to more transactions
Figure 12: Confidence points to more transactionsSource: VEH, Land Registry, Rabobank

Consumer confidence in the market for owner-occupied homes has reached new record highs in recent months. The Eigen Huis Market Indicator, published by the Homeowners’ Association (Vereniging Eigen Huis, VEH) measures this confidence and recorded a value of 118 in April 2016. This is no less than nineteen points higher than the highest point before the crisis. While confidence levels came to a standstill in mid-2015, they have risen again during the past six months. The main reason underlying this trend is that most households expect mortgage rates to remain low and house prices not to fall during the coming twelve months. High confidence generally leads to an increase in the number of transactions for existing houses, even though we do not expect this rise to be as fast as Figure 12 may suggest.


Figure 13: Affordability remains good
Figure 13: Affordability remains goodSource: Calcasa

The average affordability of owner-occupied homes in the Netherlands is very good at present. Although house prices are currently rising faster than household incomes, the historically low mortgage rates are keeping houses very affordable. Further reductions in mortgage rates (see Chapter 3) even improved affordability slightly in the first quarter of this year compared to the fourth quarter of 2015 (Calcasa, 2016). At the time of buying a house, households spend an average of 16.2% of their income on housing costs (this was 16.5% in the fourth quarter). The affordability index has varied over the past fifty years from 14% (1986) to 32% (2008; Figure 13). This year we expect just a slight worsening of the Calcasa affordability index. This will be mainly due to the persistently low mortgage rates (Chapter 3) and rising household income (Chapter 1). Affordability will worsen further in 2017 as house prices continue to rise, but will still remain at a relatively low value of around 17 or 18%.

New building lagging behind
The strong rises in the prices of existing owner-occupied homes are also to do with the fact that new house building is not keeping pace. The number of new homes sold stagnated in the second half of 2015 and is still well below the levels seen before the crisis (Figure 14). Looking ahead, there is still little sign of further growth: the number of building permits issued fell in the past 21 months to below 50,000 (Figure 15). In order to meet the increasing and changing demand for homes, some 70,000 owner-occupied and rented homes need to be built each year until 2020 (ABF Research, Primos prognoses 2016). The relatively low number of new homes coming on the market is pushing up prices in the market for existing owner-occupied homes (Van Dalen and De Vries, 2013).

Figure 14: Stagnation in sales of new homes
Figure 14: Stagnation in sales of new homesSource: NEPROM, Rabobank
Figure 15: Fall in number of building permits
Figure 15: Fall in number of building permitsSource: Statistics Netherlands, Rabobank

Residual debt problem
The faster house price rises mean that many households will move out of negative equity this year and next (see Dutch housing market: slowly but surely, more homes move into positive equity, Dutch only), and this will generate more transactions. On the other hand, the remaining residual debt problem is still holding back the rise in the number of sales and house prices. Over the course of this year we expect to update our estimate of the size of this group that is still in negative equity, based on the new WoON 2015 of Statistics Netherlands (CBS)/Ministry of the Interior and Kingdom Relations (BZK).

Policy measures
A number of policy measures will affect trends in transaction numbers and house prices. Transaction numbers in particular will be affected by the increase in the one-off gift tax exemption of EUR 53,016 per child to EUR 100,000 with effect from 1 January 2017. This exemption will apply to persons aged 18-40 years, and must only be used for the following four purposes: buying, improving or maintaining one’s house, repaying housing debt, reducing the residual debt or buying out the ground rent. One condition, however, is that the same persons must not have previously made use of the one-off gift-tax exemption in 2013 or 2014 (Tax and Customs Administration, 2016). The extension of the limit for tax-free gifts created a peak in sales at the end of 2014, but he effect on the total number of sales in recent years has been limited (Van Dalen and De Vries, 2014). We believe that the effect will be smaller in 2017 than in 2014, when this could be applied for the first time. Even so, it is quite possible that this measure will generate several thousand more transactions not in 2016, but in 2017.

An important factor affecting rises in house prices will be the relaxation of the lending criteria in 2016 and 2017, as the second income will be taken more into account and purchasing power will rise (see also Van Dalen and De Vries, 2016). On the other hand, the maximum mortgage loan compared to the value of the home (loan-to-value) will be reduced each year by 1%, from 102% this year to 100% in 2018. The maximum level of mortgage interest relief will also be reduced gradually by 0.5% per year, from its present level of 50.5% to 38% in 2041. On balance, the slightly higher lending capacity will probably exert limited upward pressure on prices. This also means that first-time buyers will increasingly have to pay a higher deposit on their home.

Unlike earlier plans, the cost limit for the National Mortgage Guarantee (Nationale Hypotheekgarantie - NHG) will be maintained. This is currently € 245,000 (including costs payable by the purchaser, the maximum purchase price is € 231,123) in 2016 and will be linked in 2017 to the average house price. This is not expected to have any significant effect on trends in transaction numbers or house prices in 2016 and 2017 (see, for example, Gevolgen veranderingen NHG in kaart, Dutch only).

Expectations for 2016 and 2017

We expect the number of sales of existing owner-occupied homes to be between 190,000 and 210,000 in 2016 (+7 to 18% compared to 2015) and 200,000 to 220,000 in 2017 (roughly +5% compared to 2016, Figure 16). Following a rise of 39% in 2014 and 16% in 2015, growth will therefore slowly but surely slow down. The house price index is expected to rise in 2016 by 3½ to 5½%, accelerating in 2017 to an average of 5 to 7% (Figure 17). In our basic scenario, house prices at the end of 2017 will still be 6% lower than at their peak before the crisis. The price rises we predict will be particularly favourable for households with a potential residual debt, but not so favourable for first-time buyers in the owner-occupied housing market.

There are uncertainties, of course. Above all, negative developments abroad could adversely affect economic growth in the Netherlands (Chapter 1) and could produce lower growth in the number of house sales and house prices.

Figure 16: Transaction expectations in 2016
Figure 16: Transaction expectations in 2016Source: Rabobank, Land Registry
Figure 17: Estimate of house price trends in 2016 and 2017
Figure 17: Estimate of house price trends in 2016 and 2017Source: Rabobank, Statistics Netherlands 

2.2 Significant regional differences, but growth everywhere

Sales rising in all regions …

Figure 18: Significant rise in transaction numbers outside the Randstad
Figure 18: Significant rise in transaction numbers outside the RandstadSource: Land Registry, computation Rabobank

The fact that the growth in the number of house sales since 2013 has not been concentrated in the urban areas is no longer news. We wrote about this in detail in Recovery in the regional housing market and Toenemende krapte en stijgende prijzen op de regionale woningmarkt (Dutch only). What was striking, however, was that the northern part of the Randstad, and within that area Amsterdam and Utrecht in particular, took the lead. The number of transactions and prices initially rose fastest in these areas, followed later by the rest of the Netherlands. Between the first quarter of 2015 and the first quarter of 2016, we have even seen more rapid growth in other parts of the Randstad and even several peripheral areas (Figure 18), a clear indication of a sustained recovery throughout the Netherlands. 

… which is leading to reduced supply in the market in all regions …

As the number of transactions rises in each region, the market is also experiencing reduced supply in all regions (Figure 19). However, even though all the regions are heading in the same direction, the differences between them are particularly marked (Figure 20). In the Haarlem agglomeration, for each house sold there were only four for sale during the first quarter of 2016, while in Delfzijl and its region there were no fewer than 29. According to the NVM’s criteria, there is still ample supply on the market in 28 of the 40 regions (a shortage indicator higher than 10), which means that buyers are in a much better negotiating position than sellers. Despite the fact that the peripheral regions are also recovering from the crisis and some of these regions have been catching up fast during the past year, we have to conclude that the underlying, more structural trend of lagging population growth is playing a major role.

Figure 19: Less supply in every region
Figure 19: Less supply in every regionSource: Huizenzoeker.nl, Rabobank
Figure 20: Major differences in shortages
Figure 20: Major differences in shortagesSource: Huizenzoeker.nl, Land Registry, Rabobank 

…and a rise in house prices

Figure 21: Rise in average sale prices in all regions
Figure 21: Rise in average sale prices in all regionsSource: Huizenzoeker.nl, Land Registry, Rabobank

The trends in transaction numbers and shortages described above translate into a rise in average sale prices in all regions (Figure 21). For the first time since 2008, no region is lagging behind in that respect. The map clearly shows the catch-up taking place in a number of northern regions. The sharp fall in supply on the market translates into a higher rise in average sale prices.

Robust house price rises in the major cities …

Although the market for owner-occupied homes is recovering in all regions, Amsterdam and Utrecht are the clear leaders (Figure 22). During the first quarter of 2016, Amsterdam experienced the highest rise: 10.7% on an annual basis. In Utrecht prices rose by 7.7% and The Hague and Rotterdam recorded rises of 7 and 5% respectively. The heavy demand for owner-occupied housing in the cities has given sellers a stronger negotiating position. In Amsterdam the house price index is already higher than its peak before the crisis (Figure 22).

The shortages on the owner-occupied housing market are particularly severe in Amsterdam and Utrecht. During the first quarter of 2016, a prospective house buyer had on average only two houses to choose from. This is even less than before the crisis (Figure 23[1]). What’s more, this figure is an average; in certain neighbourhoods the shortages are even greater. In Rotterdam and The Hague the situation is a little better; house buyers there have had around five houses to choose from in a single quarter (Figure 23).

Figure 22: House price trends in major cities
Figure 22: House price trends in major citiesSource: Statistics Netherlands, Rabobank
Figure 23: Shortages in the major cities
Figure 23: Shortages in the major citiesSource: NVM, Rabobank

… lead to falling affordability and reduced accessibility

There have been regular reports in the media recently about ‘overheating’ where Amsterdam and Utrecht are concerned. This would appear above all to be prompted by the strong price rises and the extent to which house buyers are paying over and above the asking price. Since the shortage indicator in these cities is already lower than before the crisis, the affordability of owner-occupied houses compared to incomes and mortgage rates can be put under pressure. Because of the rapid rise in demand and limited opportunities for increasing supply quickly in these cities, affordability and accessibility there is fast becoming less favourable. Mortgage approvals are bound everywhere to the applicable standards for the maximum loan in relation to the house value (LTV) and income (LTI). Households that depend on mortgage finance to buy a house are therefore finding it more and more difficult to move to expensive cities, or have to lower their ambitions as regards house size and the location within these cities.

The fact that owner-occupied homes in popular residential areas are becoming less affordable for the average household is a normal expression of scarcity. It is therefore to be expected that reduced affordability in cities with high price rises will ultimately produce a shift in demand in these cities to other areas. Ultimately the strong price rises will slow down by themselves as affordability declines. In fact, it is not only recently that prices rises in Utrecht and Amsterdam in particular have been higher than average. Even in the period before the crisis, house prices in Amsterdam and Utrecht were rising much faster than in the country as a whole. House prices in Amsterdam above all are much more sensitive to cyclical fluctuations. In 2001 the economy was flagging (the time of the dot-com crisis), which was translated into falling house prices in Amsterdam. The effect was not seen in other major cities (Figure 22). In the first phase of the crisis years as well, Amsterdam experienced a much greater fall in house prices than the rest of the country.

Chapter 3: Mortgage trends

The number of mortgage approvals continued to rise in 2016. This rise is in line with the growing number of transactions for owner-occupied homes. Due to the high level of extra repayments on mortgages the rise in total mortgage debt in 2015 remained limited. We expect this trend to continue in 2016 and 2017. Payment arrears on mortgages declined slightly, following a sustained rise over many years. Mortgage rates fell further during the first quarter and are expected to remain low in 2016 and 2017. We expect that most households will be able to cope well with a rise in their mortgage payments if mortgage rates were to rise in the future.

3.1 Level of mortgage debt has risen

The total outstanding gross mortgage debt rose in the fourth quarter of 2015 by more than EUR 1.5 billion, reaching a total of EUR 655 billion (figure 24)[2]. This represents a rise of EUR 4.4 billion in 2015 as a whole, following two years of a slight fall. The volume of mortgage approvals was therefore greater in 2015 than the repayments. Total mortgage debt figures during the first quarter of 2016, including mortgages issued by insurers and pension funds, are not yet available at the time of writing.

During the first quarter of 2016 some EUR 11.2 billion (EUR 12.5 billion seasonally adjusted) was lent in new home mortgages (Figure 25). This was a rise of 32% compared to the first quarter of 2015, and 11.6% compared to the fourth quarter of 2015 (seasonally adjusted). During the first quarter of 2016 the number of refinancing or extra borrowing transactions remained virtually the same (Figure 20). For 2016 we expect the number of new mortgage approvals to continue to rise, in line with the rise in the number of house transactions and house prices (see Chapter 2).

We expect the level of total mortgage debt to rise modestly in 2016 and 2017, just as in 2015. Set against the expected rise in the number of new mortgage approvals are the extra repayments on mortgages. As long as savings interest rates remain low, many households will choose to repay their mortgages or put their savings into a bank savings mortgage rather than building up their regular savings. The accrual of extra funds in a bank savings mortgage does not affect the outstanding gross mortgage, but does reduce the net mortgage debt.

Figure 24: Value of existing mortgage debt
Figure 24: Value of existing mortgage debtSource: Statistics Netherlands, Rabobank
Figure 25: New mortgage approvals
Figure 25: New mortgage approvalsSource: Land Registry, Rabobank

3.2 Fall in payment arrears

The year-on-year rise in mortgage payment arrears has come to an end. For the first time in ten years there was even a slight fall last year. In April of this year, there were still 110,466 individuals[3] with payment arrears of more than 120 days, compared to 112,800 in April 2015, according to the Mortgage Barometer of the Credit Registration Office (BKR, 2016). Most mortgage payment arrears are of short duration and are quickly paid off. These short-term payment problems are not recorded by the BKR. Long-term payment arrears can ultimately lead to a private sale or foreclosure. For this group of people, it is scant comfort that as house prices rise it is more likely that the home can be sold privately without incurring a loss.

Figure 26: Long-term payment arrears
Figure 26: Long-term payment arrearsSource: Credit Registration Office (BKR)

Mortgage payment arrears are often the consequence of a significant drop in income, for instance following unemployment or divorce. In the case of unemployment there is often a delayed onset of payment problems because many of those who become unemployed are initially entitled to unemployment benefits. Payment arrears only manifest themselves if no new job or other source of income is found after unemployment benefits run out. So following a drop in income, some time will pass before payment arrears arise. Similarly, as an individual’s financial situation improves it may also take some time before the arrears have been fullypaid off. As a result, the number of people coping with payment arrears may remain high for some time to come, despite economic growth and employment picking up.[4]

The slight fall in mortgage payment arrears is therefore also in line with the normal process of a phased recovery we tend to see. Economic growth has been picking up since mid-2013 and employment has also been rising since mid-2014. Unemployment is falling slowly, though, and is still well above the level it was at before the crisis. And although the number of unemployed people did fall last year, the group without work for longer than two years has in fact grown (see Chapter 1).

3.3 Low mortgage interest rates

Mortgage rates fell further during the first quarter of 2016 (Figure 27). In March 2016 the average rate for new approvals was 2.47% for a fixed-rate period of two to five years, 2.72% for a fixed-rate period of six to ten years and 3.08% for a fixed-rate period of longer than ten years (DNB). In March 2015 these figures were still 2.79%, 3.17% and 3.67% respectively, so that average interest rates are currently at new record lows for all fixed-rate periods.

With interest rates at an all-time low, a pressing question is to what extent a future rise in mortgage rates could cause problems for some homeowners. The Dutch Central Bank (DNB) warned about this in the recently published Financial Stability Overview. Our analysis indicates that the affordability risks are limited. This is due to the fact that the (Nibud) lending standards are stricter the lower the interest rates are. What’s more, most new home buyers choose a fixed-rate period of ten years or more. Among home buyers younger than 35 years, the percentage is in fact more than 80% (DNB). Home buyers who fix their interest rate for less than ten years are given a mortgage on the basis of a notional interest rate (‘toetsrente’) of 5%, which means that on the basis of their income they are well able to manage an interest rate of 5%. Young home buyers are required to take out a repayment mortgage and will usually enjoy a rise in their income over time, so that their mortgage payments will remain affordable even if rates rise. For a detailed discussion, see our Economic Report Wie krijgt last van een stijgende hypotheekrente? (in Dutch only).

In the short term, however, we do not expect to see a rise in mortgage rate. In view of the slow economic growth and the expansionary monetary policy by central banks, it is unlikely that capital market rates will rise this year. As described in our Economic Quarterly Report we expect the ECB to continue to its loose monetary policy[5] and capital market rates may even fall a little further. The 10-year swap rate fell in early May to 0.65% (Figure 28). We expect a further fall during the course of the year, to 0.5% within a period of three months and 0.3% over six months. Our 12-month forecast is 0.4% and our 18-month forecast is 1%.

Figure 27: Interest rates for new mortgages
Figure 27: Interest rates for new mortgagesSource: DNB
Figure 28: Swap rates stabilising
Figure 28: Swap rates stabilisingSource: Macrobond

Indices for credit default swaps (CDS) and recent emissions of covered bonds by banks and insurers also show that the associated spreads fell again in the months of February, March and April, following a rise in January. These spreads can be seen as an indicator for the risk premium that banks have to pay when attracting capital market funding to provide mortgages. The securitisation of mortgage portfolios (residential mortgage-backed securities; RMBS) has become a less important source of finance during recent years (DNB, 2016). However, Dynamic Credit, which issues mortgages under the Elan label, recently announced its first RMBS issuance (Global Capital, 2016).

Figure 29: Market share of banks and non-bank mortgage lenders
Figure 29: Market share of banks and non-bank mortgage lendersSource: Land Registry, Rabobank

Compared to banks, insurers and pension funds are less dependent on external financing, because they issue mortgages as an investment of the pension or insurance premiums paid by members. These parties are playing an ever greater role on the mortgage market (Figure 23) and through increased competition exert downward pressure on mortgage rates.

We do expect that, on balance, mortgage rates will remain low in 2016 and 2017.


[1] It should be noted that these figures of the NVM are taken on average two to three months before the shortage indicators discussed above, based on huizenzoeker.nl/Land Registry. 

[2] This EUR € 655 billion concerns the gross mortgage debt. This has not been adjusted for capital accrued in savings mortgages (Spaarrekening Eigen Woning - SEW) and capital insurance policies (Kapitaalverzekering Eigen Woning - KEW). Researchers at DNB estimate this accrued capital to be worth EUR 31-37 billion (DNB, 2015). Since the accrued capital in savings mortgages will increase faster for a relatively large group of households in the coming years due to the cumulative return on capital, the net mortgage debt will rise more slowly than the gross mortgage debt and this net debt may even fall while the gross debt rises.

[3] A mortgage contract is often in two names, which means that fewer households are involved.

[4] For a more detailed discussion, see paragraph 3.3 of our Dutch Housing Market Quarterly of May 2014.

[5] For a detailed discussion of European monetary policy, see this Special.


-some articles only available in Dutch-

BKR (2016). Betalingsproblemen hypotheek nemen af, Press realease 14 april

Belastingdienst (2016). Aantal regels rondom eigen woning verandert.

CPB (2016). Centraal Economisch plan 2016.

De Groot, E. (2016). Monetary challenges in Europe, Rabobank Special, Utrecht

DNB (2015). Dutch mortgages in the DNB loan level data. Occasional Studies, vol. 13-4. De Nederlandsche Bank, Amsterdam.

DNB (2016). Overzicht Financiële Stabiliteit, De Nederlandsche Bank, Amsterdam.

DNB (2016). Covered bonds nu omvangrijker dan securitisaties, Statistisch Nieuwsbericht 22 maart, De Nederlandsche Bank, Amsterdam.

De Vries, P. en Van Dalen, P (2016). Wie krijgt last van een stijgende hypotheekrente?, Rabobank Themabericht, Utrecht

Global Capital (2016). Goldman Sachs to arrange Dynamic Credit’s first Dutch RMBS deal, 22 april

Heijden, Van der H., Groetelaers D., Dol, K. en Lamain C. (2015) Concurrentie en keuze op de markt voor nieuwe koopwoningen, 2015.

Treur, L. (2014). Toename betalingsachterstanden, paragraaf 3.3. uit Kwartaalbericht Woningmarkt, Rabobank, Utrecht.

Van Dalen, P. en P. De Vries (2015). Nederlandse woningmarkt: langzaam maar zeker meer huizen boven water. Rabobank, Utrecht.

Van Dalen, P. en P. De Vries (2016). Stijgende inkomens en dalende hypotheekrente compenseren voor een aanzienlijk deel de strengere Nibud-normen


Prices and sales
Prices and salesSource: CBS, computationRabobank
House price index and annual development
House price index and annual developmentSource: CBS, Calcasa, NVM, Kadaster
Issued building permits
Issued building permitsSource: CBS
Capital market: various countries
Capital market: various countries Source: Macrobond
3-month Euribor
3-month EuriborSource: Macrobond
Interest rate on new mortgages by term
Interest rate on new mortgages by term Source: DNB
Owner-occupied confidence
Owner-occupied confidenceSource: Home-ownership association
Volume of new mortgages by term
Volume of new mortgages by term Source: DNB
Unemployment in The Netherlands
Unemployment in the NetherlandsSource: CBS
International comparison of unemployment
International comparison of unemploymentSource: Eurostat
International house price development
International house price developmentSource: Dallas Fed
Economic expectations The Netherlands
Economic expectations The NetherlandsSource: CBS, Rabobank

Key data


The Dutch Housing Market Quarterly is a publication of Economic Research (ER) of Rabobank. The view presented in this publication has been based on data from sources we consider to be reliable. Among others. these include Macrobond, Land Registry, NVM, DNB, CPB and Statistics Netherlands. The date of completion is 9th May 2016.

This data has been carefully incorporated into our analyses. Rabobank accepts. however. no liability whatsoever should the data or prognoses presented in this publication contain any errors. The information concerned is of a general nature and is subject to change.

No rights may be derived from the information provided. Past results provide no guarantee for the future. Rabobank and all other providers of information contained in this brochure and on the websites to which it makes reference accept no liability whatsoever for the brochure’s content or for information provided on or via the websites.

The use of this publication in whole or in part is permitted only if accompanied by an acknowledgement of the source. The user of the information is responsible for any use of the information. The user is obliged to adhere to changes made by the Rabobank regarding the information’s use. Dutch law applies.

Economic Research can also be found on the internet: www.rabobank.com/economics

For more information. please call the ER secretariat on tel. +31 (0)30 – 216 6666 or send an email to ‘economics@rn.rabobank.nl’.

Text contributors:
Pieter van Dalen, Rogier Aalders, Björn Giesbergen and Leontine Treur

Text editors: 
Rogier Aalders and Paul de Vries 

Tim Legierse, head of Head Domestic Research, Rabobank Economic Research

Production coordinator:
Christel Frentz

© 2016 - Coöperatieve Centrale Raiffeisen-Boerenleenbank B,A., the Netherlands


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