Economic Context
The Dutch economy is projected to grow by 1.4% in 2026, with unemployment stable at 3.9%. Wage growth under collective agreements is forecast to moderate to 4.0%. While economic fundamentals remain resilient, rising interest rates are emerging as a headwind, influencing both household affordability and investor return requirements. Overall sentiment remains robust, but caution is warranted amid evolving macroeconomic conditions.
Investment Market
The Dutch residential investment market maintained strong momentum in the third quarter of 2026. Total investment volume reached approximately €4.45 billion year-to-date, with 53% of this volume transacted during the third quarter. As a result, the residential sector continues to be a key driver of the Dutch real estate investment market.
Domestic institutional investors remain focused on high-quality new-build residential assets, although limited availability is increasingly constraining investment activity. Within the existing housing stock, private equity firms and value-add investors remain active, particularly in strategies aimed at the sale of individual rental units. However, strong rental growth is making the re-letting of residential properties increasingly attractive, further stimulating interest from core-plus and international investors.
At the same time, rising interest rates and the resulting increase in financing costs and return requirements are creating growing headwinds. This is placing upward pressure on initial yields. In addition, the proposed reduction of the property transfer tax from 8% to 7%, effective January 2027, may encourage investors to postpone transactions involving existing residential assets. Consequently, investment activity could temporarily soften in the fourth quarter, despite sustained investor demand and ample capital availability.
Occupier Market
The Dutch housing market continues to be characterised by persistent supply shortages, although the owner-occupied housing market is gradually showing signs of cooling. The number of homes listed for sale has increased by approximately 24%, yet available supply remains low relative to the number of transactions completed each quarter. While the market is becoming somewhat more accessible, there is still no indication of oversupply.
Competition therefore remains intense, and house prices continue to rise, albeit at a more moderate and selective pace. Higher interest rates could act as a headwind by directly constraining borrowing capacity and affordability for households. This is particularly relevant for new-build homes, where buyers may face dual housing costs for an extended period before the property is completed and delivered.
Meanwhile, the rental market is experiencing the opposite trend. Ongoing sales of rental properties to owner-occupiers have reduced the size of the private rental stock, while underlying demand remains strong. This continues to place upward pressure on rents for newly let properties.
Cushman & Wakefield expects rents in the private rental sector to increase by approximately 4.5% in 2026 and 3.9% in 2027. As a result, improving availability in the owner-occupied housing market is increasingly being accompanied by growing scarcity and affordability pressures within the rental sector.
