Editor in chief at IamExpat Media
House prices have been on a virtually unstoppable climb over the last 20 years, but - unbelievable as it might sound - the Netherlands is still actually one of the more affordable housing markets in the EU, according to a new report from ABN AMRO.
Although house prices have risen quickly in the Netherlands over the last 20 years, negatively impacting affordability, the ABN AMRO report highlights that this trend is not remarkable within the European Union.
Comparing real house price growth across the bloc - calculated as house prices adjusted for national inflation - ABN AMRO found that the country with the highest real price growth is Portugal, where prices have risen 85% in 10 years, with Hungary (+80%) and Lithuania (56%) completing the podium.
Overall, the Netherlands ranks seventh with an average price growth of 48%. However, this is above the EU median of +32% and significantly higher than in neighbouring countries like Belgium (+6,8%) and Germany (+14,4%).
However, the report found that buying a house in the Netherlands remains relatively affordable. This was calculated by looking at the average proportion of net income spent on repaying mortgages. In the Netherlands, this share came in at 29% for couples and 40% for single people. These figures are among the lowest in the EU, and below the average of 48% for couples and 54% for singles.
Adding to this picture of affordability is the fact that the price-to-income ratio of properties in the Netherlands has stayed relatively stable over the past 10 years. While house prices rise, so do salaries.
ABN AMRO also looked at the share of households that were in arrears (meaning they are overdue on payments for their mortgage, rent or utility bills). In 2023, the EU average was 9,3%, and proportions were particularly high in Greece (47%), Bulgaria (19%) and Romania (14,4%). The Netherlands ranks the lowest in Europe with a share of 2,6%, indicating that most households are financially stable.
One of the most interesting parts of the report is where ABN AMRO looks at various factors to estimate the impact of factors such as population growth, housing shortages, salary growth and housing subsidies on house prices.
Their conclusion, which may be surprising to some, is that housing shortages and population growth do relatively little to push up house prices. For instance, the three countries with the largest population growth between 2014 to 2024 (Malta, Luxembourg and Ireland) are not the countries where house prices have risen fastest.
However, the data clearly shows that, as income increases, people can afford to pay more for a home. For instance, countries like Lithuania and Bulgaria have seen a huge growth in net household income, reflected in rapidly rising house prices.
In the Netherlands, earnings have risen 36% over the last 10 years, and are further supported by generous housing subsidies like the mortgage income tax break. ABN AMRO concluded that “income growth drives real house prices.”