After years of rising mortgage rates, interest rates still remain historically low. This increase is because inflation has risen significantly over the past year. This rise in inflation is mainly due to higher energy prices. If inflation rises too fast, the European Central Bank (ECB) must intervene. The ECB then raises the interest rates for banks.
Because risk premiums on financial markets have increased since the outbreak of war in Ukraine, ABN AMRO bank expects mortgage rates to rise further this year.
Despite the rise in mortgage rates, inflation and the war in Ukraine, Rabobank expects house prices to rise further this year. However, the bank expects that house price growth will slow down in the coming years.
Another aspect that affects house prices is the demand for housing. The population in the Netherlands will continue to increase. In 2035, our country is expected to have 18,3 million inhabitants. Especially the large and medium-sized cities will grow, as well as various suburbs around the major cities.
Amsterdam will gain the most inhabitants, expected to grow by more than 150.000 by 2035. Various other municipalities around the large cities are also growing, such as Almere and Haarlemmermeer. These municipalities receive many young couples from the big city because of their new buildings. This represents a growth of almost 20 percent compared to 2019.
The demand for housing is not only determined by the growth of the population. More and more people are also living alone. This is evident from the Regional Population and Household Forecast 2019-2050 of the Netherlands Environmental Assessment Agency (PBL) and Statistics Netherlands (CBS).
By 2035, the Netherlands is expected to have half a million more people living alone than today. By then, almost 20 percent of the population will be living alone, as opposed to just over 17 percent now.
In the four major cities - Amsterdam, Rotterdam, The Hague and Utrecht - the percentage of people living alone is already high (mainly due to the influx of students and working young people) and will continue to rise as the population ages.
In addition, we see that more and more knowledgeable migrants are coming to the Netherlands. The strain on the Dutch labour market is unprecedentedly high and that does not seem likely to change for the time being. The Netherlands is popular among highly-skilled migrants, not only because of the supply of jobs but also because most Dutch people speak English.