Main developments
The Dutch economic outlook shifted during the first quarter, as the escalation of conflict in the Middle East drove energy prices higher and pushed up interest rates and inflation expectations. Consumer confidence fell sharply and economic growth slowed significantly. The labour market remained stable, continuing to support the housing and mortgage market.
The housing market recorded a seasonal decline in activity in the first quarter, with 55,949 transactions. The ongoing exit of private landlords continued to support supply, with the sell-off expected to persist through the first half of 2026 before gradually slowing. The quarter brought the first major signal that professional investors may also be looking to reduce their residential exposure, raising the question whether these properties will remain in the rental sector or enter the owner-occupied market. House price growth moderated to 5.7% year-on-year.
Mortgage origination volumes reached €41.3 billion, down from the Q4 record but above year-ago levels, with a record week of applications at the end of March as rising rates prompted buyers to accelerate their decisions. Mortgage spreads narrowed further as competitive pressure and a lag in rate pass-through compressed margins.
The supervisory-driven shift in interest-only mortgage policy has now translated into concrete market changes. Several major banks have reduced the maximum interest-only component from 50% to 30% of the property value, with potential consequences for housing mobility among older homeowners and, by extension, the supply of family homes to the broader market.
Economic indicators
The Dutch economic outlook became more uncertain during the first quarter of 2026. Escalating conflict in the Middle East drove energy prices sharply higher, pushing up inflation expectations and interest rates. While the Dutch economy and financial sector have so far remained resilient, risks to growth and inflation have increased. Consumer confidence fell sharply and continued to deteriorate into April.
Economics
The macroeconomic backdrop at the start of 2026 was shaped by a significant external shock. Following military strikes on Iran by the United States and Israel in late February, conflict in the Middle East intensified sharply. The Strait of Hormuz, through which approximately one-fifth of global oil and liquefied natural gas is transported, was largely closed to shipping, triggering an abrupt rise in energy prices. The resulting rise in inflation expectations and long-term interest rates directly affected mortgage rates and borrowing capacity, while the broader geopolitical uncertainty weighed heavily on consumer confidence.
The Dutch economy entered the quarter from a position of strength. GDP grew by 1.9% in 2025, significantly above earlier expectations. Both DNB and CPB have since revised their 2026 outlooks. The CPB's Central Economic Plan, published in March, projected growth of 1.4% but had not yet incorporated the impact of higher energy prices. DNB's scenario analysis, published in late March, placed base-case growth around 0.9%, with inflation rising to approximately 3.1%. The CBS flash estimate for Q1 showed a sharp slowdown: GDP grew by just 0.1% quarter-on-quarter, down from 0.4% in Q4 2025.
Recent data already point in this direction, with Dutch inflation rising from 2.4% in January and February to 2.7% in March. This shift in the macroeconomic outlook was also reflected in the Financial Stability Committee’s March assessment, which characterised the outlook for financial stability as "code orange", noting that risks to growth and inflation have increased while financial markets have continued to function in an orderly manner. The ECB left its deposit rate unchanged at 2.0% and revised its 2026 eurozone inflation forecast upward to 2.6%, from 1.9% in December.
Consumer confidence deteriorated sharply during the quarter, declining from -24 in February to -30 in March, the largest single-month drop in nearly four years. On this scale, zero represents a neutral balance between optimists and pessimists; the twenty-year average stands at -11. Data for April show a further decline to -44, the second-largest monthly drop since the survey began in 1986, surpassed only by the initial shock of the coronavirus pandemic in 2020. Households report growing concerns about their personal finances and are increasingly postponing major purchases.
The labour market remained broadly stable, with unemployment holding at 4.0% for the fourth consecutive month. Contractual wages rose 4.5% year-on-year in the first quarter, with real wage growth of around 2.0% continuing to support household purchasing power.
Overall, the macroeconomic environment has become more uncertain relative to the end of 2025. Higher energy prices, rising interest rate expectations and weaker consumer confidence are likely to weigh on economic activity and housing demand, although the resilience of the labour market continues to provide an important stabilising factor.
