Market developments

The Dutch economy

Inflation remains high, ECB deposit rate decreased in 2024

• The inflation rate remained higher than expected and reached 3.9% in 2024 (CBS, 2025). Inflation is expected to be 2.4% in 2025 (Oxford Economics, 2024).

• The growth in inflation rates in 2024 was largely driven by rising wages, which have increased by 6.5% annually (CBS, 2025). The wage growth is expected to remain relatively high in the year to come. According to the CPB (August 2024), wage growth is expected to reach 4.3% in 2025.

• After the ECB deposit rate sharply increased during 2022 and 2023, the ECB decreased the deposit rate in 2024 from 4.0% to 3.0%, in four steps of 25 bps.

• The Dutch 10-year government bond rate increased significantly during 2022 and has since fluctuated between 2.5% and 3.0%. The rate stood at 2.6% at the end of 2024 (Investing.com, 2025) and is expected to decrease towards 2.3% in the next two years (Oxford Economics, 2024).

Lower interest rates stimulated economic growth

• After negative GDP growth figures in 2023, the Dutch economy showed positive developments during 2024. The lower interest rates have stimulated economic growth. GDP is expected to be 1.8% in Q4 2024 (CBS and ING, 2025). Due to various geopolitical tensions, the economic outlook remains uncertain.

• The positive growth in 2024 was mainly caused by improved purchasing power, as households experienced greater wage growth and more tax reliefs. Additionally, the strong labour market (low unemployment rate and many vacancies) will further boost income and purchasing power.

Figure 7: Macro-economic situation Dutch economy

Source: CBS, 2025; Investing.com, 2025

Figure 8: ECB deposit rate and 10-yr Dutch government bond

^{In percentage}

Source: ECB, 2024; Investing.com, 2025

Demography of the Netherlands

Double aging continues to put pressure on suitable housing for the elderly

• There is clear evidence of double aging in the Netherlands, meaning that the number and share of the 65+ population is increasing and that the average age of this population is going up. The number of households in the age cohort of 75 year+ will increase from 1.2 million in 2024 to 2.1 million in 2050, an increase of 900,000 households (+79%).

• Currently, 300,000 people have dementia in the Netherlands. With the aging population, this number will rise to more than 500,000 by 2040 and over 640,000 by 2050. By 2040, 340,000 people in this group will live independently, while 160,000 will require nursing home facilities—which are currently not available.

• The government has set a goal to create 290,000 housing units suitable for the elderly by 2030. Additionally, the feasibility of reintroducing light-care homes is being explored.

Figure 3: Development of the number of households by age cohort, 2024-2050

Source: ABF Research, Primos, 2025

The Dutch healthcare real estate market

Investment activity in healthcare real estate remained low

• The investment volume in the healthcare real estate market increased by 11%, rising from €653 million in 2023 to €724 million in 2024. The number of deals also increased, from 60 in 2023 to 78 in 2024.

• The investment volume remains well below the levels recorded prior to 2023, which exceeded €1 billion.

• Domestic buyers accounted for 95% of the investment volume. The remaining 5% was purchased by Aedifica (Belgian) and represented one deal with a value €25 million (The Korian portfolio).

Prime gross initial yield levels in healthcare real estate have compressed

• Yield levels for care homes (private care apartments and extramural) have compressed. Yield compression is around 20 bps in 2024, from 5.1% in Q4 2023 to 4.9% in Q4 2024 (private care apartments).

• The yield compression is mainly caused by lower interest rates. The Dutch 10-year government bond has decreased strongly, putting downward pressure on initial yields in real estate.

Figure 4: Development of gross initial yield levels healthcare real estate

Source: Capital Value, 2025

The Dutch residential real estate market (as proxy for assisted living)

Improved lending conditions and high demand boosted owner-occupied housing prices

• After a relatively short period of decline in 2022 and 2023, housing price growth is accelerating again. In November 2024, the annual housing price growth reached 11.9% (CBS, 2025).

• Factors such as increased lending capacity, lower mortgage interest rates and significant income increases are contributing to the rise in housing prices.

• Moreover, the demand for housing is high, and new developments are lagging. The mismatch between demand and supply will continue to worsen in the years to come.

• The two-year forecasts of the large banks in the Netherlands are also relatively positive. On average, these institutions expect housing prices to increase by 6.8% in 2025 and 3.8% in 2026 (ABN AMRO, ING, Rabobank and DNB, 2024).

Figure 9: Price development owner-occupied houses

Source: CBS, 2025

Permit numbers are picking up, but new construction remains insufficient

• Due to the improved housing market conditions, permit numbers increased again in 2024. By October 2024, about 53,000 permits were issued, compared to 55,000 for the whole of 2023 (CBS, 2024). The number of permits have reached 67,200 in 2024

• However, labour shortages, rising construction costs and new national legislation continue to impact the financial feasibility of new (area) developments.

• Since permits for new developments decreased sharply in 2023, the completion of new residential homes is expected to be around 60,000 in the next two years (Capital Value, 2024), which is substantially lower than the last five to seven years.

Figure 10: Annual completion and permits

Source: CBS, 2024, Capital Value, 2024 

Investment volume in residential real estate increased by more than 50%

• Investment activity has picked up, as the price decline of rental homes seems to have bottomed out and the residential market is attractively priced.

• In 2024, the investment volume reached €6.6 billion, which is an increase of more than 50% compared to 2023 (Capital Value, 2025). The low investment volume in 2023 was a result of rising interest rates and surging residential prices.

• Private investors, who often purchase assets with a strategy to dispose upon turnover, contribute to much of the activity in existing properties. Attractive vacant value ratios, combined with the impact of the Affordable Rent Act and higher transfer taxes, have increased the disposition activities of many private investors.

• Appetite for residential investments seems to have increased, and the expected decline in transfer tax from 10.4% to 8.0% will further boost investment activity from 2026 onwards.

Prices have bottomed out and gross initial yields compressed in 2024

• Prices of residential investments bottomed out in the second half of 2023. Additionally, in 2024, gross initial yield levels for prime new construction showed signs of compression in all regions (Capital Value, 2025).

• Prime yield levels in the G5 (Amsterdam, Rotterdam, The Hague, Utrecht and Eindhoven) compressed by approximately 40 bps in 2024, reaching 3.75% in Q4. In the other regions, the decrease was 20 to 25 bps.

• The expected higher investment activity and a further decline of the risk-free rate (the Dutch 10-year government bond rate) in 2025 will put additional downward pressure on yield levels and boost capital growth of rental homes.

Figure 11: Prime gross initial yield levels residential investments per region

Source: Capital Value, 2025 

The Affordable Rent Act is in effect

• The Affordable Rent Act took effect on 1 July 2024, which means that a part of the liberalised rental sector is now regulated in the mid-rental sector. The points system (WWS) is now used to determine whether a house falls into the social sector, mid-rental sector or free market sector.

• Houses between 144 points (€879.66) and 186 points (€1,157.95) belong to the mid-rental sector (2024 prices). Rent levels are capped to the maximum reasonable rent, and the rent levels per WWS points are indexed by inflation annually. The points system itself has been updated and modernised as well. Amongst other adjustments, more points are given to sustainable homes and less to unsustainable homes. Additionally, the presence of private outdoor space has a positive impact on the number of WWS points.

• In addition to this act, a new regulation is being developed that will require all new developments to consist of at least two-thirds affordable (social and mid-priced) and a maximum of one-third free market (33%, both rent and purchase) housing.

Contract indexation is capped

• Annual contract indexation is regulated as well. For social housing, the indexation of rental contracts is linked to wage growth until 2025. In 2024, this resulted in a maximum indexation of 5.8%. For 2025, the indexation of social rent is also 5.8%.

• For the mid-rental sector, contract indexation is linked to wage growth plus 1.0%-point. For 2025 this means that rents may be increased by a maximum of 7.7% (wage growth was 6.7%).

• For the free rental sector, the maximum contractual indexation is linked to inflation or wage growth plus 1.0%-point, whichever is lowest. In 2024, this resulted in a maximum indexation of 5.5% (4.5% inflation). For 2025, contract indexation is a maximum of 4.1%.