The outlook for 2019

Economic growth set to continue, but less strong than in 2018

The forecasts for 2019 are favourable, but Dutch economic growth will flatten out in 2019 to 1.5%.[1] This is still 0.5% above the average European growth percentage. Low interest rates and stimulating budget policies will support economic growth. Driven by changes in government policy (income tax, higher VAT rates and higher energy prices) and labour shortages, inflation is set to increase to 2.4% in 2019. Employment is expected to increase by 1.5% this year and unemployment will decline by 0.3% from last year’s figure to 3.6% in 2019. This will have a positive impact on profits and disposable income, which will in turn have a positive impact on consumer spending. This is partly why the confidence indicators for the year ahead are way above their long-term average.

Uncertainty about Brexit, international trade tensions and unrest in the Eurozone (due among other things to the Italian government’s budget policy and the yellow vests in France) are putting a brake on economic growth. One risk specific to the Netherlands is a potential downturn in the housing market (after the sharp price increases in previous years). It is difficult to predict such a downturn, but it could have a major economic impact.

Lagging supply keeps pressure on owner-occupier and rental markets

Despite a slight flattening of house prices rises, the pressure in the housing market is expected to continue in 2019. Due to the limited capacity of the Dutch construction industry and consequently the sharp increase in construction costs (due in turn to the shortage of qualified workers), supply will continue to lag demand. This means that house prices are likely to continue to rise, but at a lower level. The Dutch central bank DNB[2] is forecasting a rise of 5.5% in 2019 (Rabobank and ABN AMRO are predicting 6%) and 2.8% in 2020 (ABN AMRO 4%). This is in line with the estimated deceleration in economic growth and in consumer confidence. In addition to this, the drop in mortgage interest rates has bottomed out, in a period of very moderate growth in outstanding mortgage debt (due to factors such as the repayment obligation and low savings interest rates). ABN AMRO expects[3] the persistent low inflation and other factors to keep interest rates low, although this prediction does come with a rather wide margin of uncertainty. Due to liquid money markets and lagging housing supply, the number of transactions is expected to decline by 5% in 2019, compared with 2018.

Potential interest rate rises could put a brake on declining initial yields

The Dutch investment market for residential real estate is expected to remain attractive in 2019. The structural demand for liberalised sector rental homes from consumers, in combination with the relatively limited supply, allows for relatively stable returns for investors. The winding down of the ECB’s government debt purchasing programme and interest rate increases may put upward pressure on return requirements (alternative asset categories, such as bonds, will be more attractive in relative terms).

On top of this, there are bound to be too few investment opportunities in the year ahead, especially in the large Dutch cities. This might put even more downward pressure on initial yields[4]. This will make medium-sized cities increasingly attractive to residential real estate investors. Many investors are likely to switch from a strategy of individual unit sales to a strategy of holding and operating existing residential complexes.

Local authorities are increasingly looking to increase the regulation of government-regulated and mid-rental segment homes in new-build projects in order to keep homes affordable. These stricter rules could make it more difficult to develop suitable locations in land development. On a national level, the Dutch government is considering implementing legislation that would give municipalities with tight housing markets the power to cap prices for new rental contracts at a certain percentage of a government-set property value, the so-called emergency button.

Outlook for 2019


Economic growth passes down to consumers, higher incomes increase spending and push up inflation

Risk that downturn in price rises in the housing market could have a major impact on economy

Weakening economic growth due to uncertainty around Brexit and international trade


Rising employment and (therefore) falling unemployment push up wages

Winding down of ECB debt-purchasing programme (interest rate policy still unchanged)


Wages rise faster than productivity


Residential Market - Rental market

Tightness of the owner-occupier market continues to increase demand for rental homes, and increasingly outside the large cities

(Excessive) influence of local authorities on the regulation of the rental market limits investment opportunities

Loss of momentum due to limited investment opportunities, limited construction capacity and a lack of locations


Higher wages increases consumers’ purchasing power

Flattening price rises in large cities limits indirect returns


Shortage of mainly mid-rental segment homes (€ 710 to € 1,000) and segment from € 1,000 upwards


Residential Market - Owner-occupier market

Continued high demand for owner-occupier homes

Deceleration of price increases in the large cities

Declining residential supply in popular areas


Low interest rates (likely to continue)

Potential interest rate rises makes it more difficult for first-time buyers to buy homes on the housing market

Continuing tightness on the whole housing market

Investment market

Dutch investment market remains attractive due to low risk profile and stable returns

Potential interest rate rises put a brake on declining initial yields

Limited supply of development locations or existing properties


Medium-sized cities more and more interesting as investment opportunity due to overflow from high-pressure areas

Less focus on individual unit sales, more focus on holding and operating existing properties

Steadily declining supply for growing group of investors increases competition

For more information about our main risk areas, please see the section Risk management and Note 25 ‘Financial risk management objectives and policies’ of this report.

  • 1 CPB – March estimate 2019: economic outlook 2019
  • 2 DNB – Economic expecations and forecasts (2018).
  • 3 ABN AMRO – Housing market monitor January 2019
  • 4 Colliers – Residential Investment Attractiveness Index (2018).