Social Concerns Over Dutch Housing Shortage

‘For Rent’ sign on home in Groningen. Amber van Kempen

Low housing supply and high demand has been a persistent social problem in the Netherlands, especially since COVID-19. The rapidly rising prices of homes combined with lingering high mortgage interest rates are adversely affecting the housing market, according to both realtors and banks.

In the first quarter of this year, home selling prices increased by around 8% compared to the last quarter of 2023. By the end of 2024, “another rise of 11% is to be expected,” says an employee of the Dutch bank Rabobank who wishes to remain anonymous.

Although interest rates are dropping slightly, “unexpected political or economic changes can still greatly influence the rates,” says Kayleigh Veninga, a realtor at Drenths Makelaardij. This is because the Netherlands has a new coalition to lead the country, so rules and laws regarding housing prices and construction can change. The rules are still quite new and subject to change as the effects they will have on society and the governments ability to cater to all its citizens needs are still unfolding.

For example, due to the government’s desire to reduce the amount of nitrogen in the environment, home construction has stopped. The policy, aimed at reducing environmental damage from nitrogen emissions, has paused construction projects, directly limiting housing availability. Moreover, Veninga emphasizes that without government incentives to build more houses, and increasing the supply to meet the demand, “selling prices will only keep rising.”

Mental and financial strain

The skyrocketing home prices in cities and the unchanged incomes are either pushing young first-time buyers, internationals, and students away from their peers as homes outside of cities are cheaper or forcing them to keep living with their parents in order to save enough money. This financial strain could contribute to a myriad of mental health problems, such as stress, anxiety and depression according to Statistics Netherlands.

The employee at Rabobank highlights that high property prices and relatively low salaries make homeownership unattainable for many, particularly those with low incomes. These individuals often lack the financial capacity to secure a large mortgage that covers both the cost of a house and basic living expenses.

The combination of the mental and financial strain that now comes with buying a house “only keeps worsening,” says Veninga as she remembers her clients’ concerns.

Options like temporary housing and low-income jobs can offer short-term solutions to those in need as they can give low-income earners a roof over their head and a little bit of money. However, the Rabobank employee points out that due to the social status, financial history and low income of those in need, like homeless people or those living in shelters, the bank’s lack of confidence in these borrowers’ ability to repay their loans marginalizes them even further. This effectively excludes them from the housing market and broader society.

In addition to the struggles of homeownership, renting a house may be a cheaper option for those ready to move out of their current homes, especially in social housing, where the quality of homes is not great. While social housing offers rent control, private landlords – unrestricted by these regulations – can raise prices in response to market demand, says realtor Veninga. This dynamic neither alleviates market pressure nor reduces stress for renters or owners.

By 2027, it will be impossible to carry over surplus value – the profit gained from selling a house – to a new property, as homeowners will face high taxes on the surplus value, according to the Rabobank employee and Veninga

Contrary to the appeal of moving before 2027, the new taxes would make selling and buying more expensive houses less financially attractive thus relieving the market of the stress that comes with the demand for homes and the lack of construction.