ING expects house price rise to soften in 2025

ING expects house prices to rise further in 2025, but less sharply than this year. For next year, the bank expects an increase of 5.5%.

By the end of this year, prices are expected to be about 12% higher than at the end of last year. Earlier this year, the bank was still assuming an increase of up to 8%.

ABN Amro adjusted its house price riseestimate from 5% to 7% last week. ING Research expects house prices to continue rising in 2025 for three reasons:

Higher borrowing capacity

First, the bank expects maximum borrowing capacity to be higher next year than this year, despite the Nibud's stricter mortgage standards going into effect before 2025. ING also expects collective wages to be about 4% higher in the third quarter of next year than in the past quarter. At roughly constant capital market interest rates, this will lead to slightly higher borrowing capacity next year compared to now. This will have an upward effect on house prices.

Continued tightness in the housing market

Secondly, the bank expects the tightness in the housing market to continue in 2025. The supply of homes for sale is limited, creating very few choices among buyers. Expected price increases by house seekers.

Expected price increases by house seekers

Third, expectations about house price increases by house seekers contribute to actual house price increases. The share of house seekers expecting house price increases next year increased significantly over the past year. As house seekers expect a house price rise, they may be willing to bid more for a house for sale.

More rental properties become owner-occupied homes

Nonetheless, ING thinks that by 2025, house price growth will be slower than this year. Again, the bank gives three reasons for this:

First, the rise in borrowing capacity is softening: borrowing capacity for homebuyers will continue to rise next year, but less sharply than this year. Secondly, investors will sell more rental properties next year than they do now. This development dampens the upward momentum of house prices.

More and more rental properties are becoming owner-occupied and ING expects this trend to continue next year. On the one hand, this contributes to a wider supply and more choice, especially for first-time buyers. After all, investors are putting their rental properties up for sale and they are bidding to a lesser extent to acquire homes. At the same time, this development is causing capital to flow out of the housing market.

Thirdly, ING expects unemployment to rise slightly. This may reduce the demand for owner-occupied houses somewhat.

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