Dutch financial services watchdog AFM said on Tuesday it is concerned about both the current strong rise on the stock markets and about the housing market overheating.

While the coronavirus pandemic had a major impact on the financial markets, they are now ‘breaking records and seemingly disconnected from the real economy’ AFM chairwoman Laura van Geest said at the publication of the agency’s 2020 annual report. This, she said, is a particular risk to private individuals – now that one in five households invest on the stock market.

Amsterdam’s AEX blue chip index, for example, set a new closing record after almost 20 years earlier this month.

More than half the new investors are aged 18 to 34, the AFM figures show. And while they put in less money – three in five have less than €5,000 to invest – they take more risks. This, the agency said, is partly due to the lack of interest on savings and the rise of trading apps.

‘Although index-linked investing remains popular among young people, there is a group of investors who are increasingly taking risks,’ she said. ‘Given the stock market is breaking record after record despite the coronavirus crisis, this is an extra reason for the AFM to be vigilant.’

At the same time first-time buyers are struggling to get a home and the shortage of housing is pushing up prices even more, Van Geest said. Efforts to make it easier for first time buyers to buy in terms of the financing are only adding to the difficulties, she said, referring to the decision to scrap property transfer tax for the under-35s.

‘The problems for first-time buyers are only getting worse, while current home owners are sitting pretty,’ she said. ‘We will continue to warn against that.’