The Dutch housing market in 20Q4 - Prices continue to rise, only cities with many expats and tourists pre-corona see a drop in rents.
The Dutch housing market in 20Q4 - Prices continue to rise, only cities with many expats and tourists pre-corona see a drop in rents.
Now that the data of the last quarter has been analysed, we are closing a special year, a year marked by the corona pandemic. With international travel bans, mandatory lockdowns and huge aid packages, the economic bill is waiting. Expectations were that this would also bring down prices on the housing market. The opposite is true. In the cities and areas surveyed by FRIS, the transaction price per square metre increased by 10%. In the rental market, we see some influence of the corona crisis: in cities that attracted many expats and tourists pre-corona, we see a decrease in rental prices. This is especially noticeable in the more expensive segment, where expats could pay the rents. And Airbnb apartments that are now offered for rent or on the owner-occupied market.
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Figure 1: Development of purchasing price per square metre on annual basis (20Q4 compared to 19Q4)
Figure 1 shows the year-on-year development in transaction prices per square metre. In all cases the increase was around 10%, with peaks of 14.9% and 14.8% in Utrecht and Almere respectively. The cities with the lowest increase were Haarlem and Lelystad, with 9.1% and 9.4% respectively. Amsterdam remains the absolute front runner with a median transaction price per square metre of €6,568, whereas the Dutch median transaction price per square metre is €2,623.
Figure 2: Median purchasing price per square metre 20Q4
The expected drop in prices on the housing market has therefore not materialised. On the contrary: prices[1] on the owner-occupier market have risen in all the cities and regions[2] investigated by FRIS. The scarcity indicator (figure 3) compiled by the Dutch Association of Real Estate Agents (NVM) once again shows that as long as no additional houses are built, prices on the housing market will not fall. This is also reflected in the number of 'oversold' transactions (see figure 4). In all cities, we see that (almost) a third of the transactions are sold above the asking price. Figure 5 also shows that the duration of a transaction remains very low in the cities, especially if we compare the durations in the cities studied by FRIS with the average duration in the Netherlands of 85 days.
[1] Development of purchasing price per square metre 20Q4 compared to 19Q4.
[2] Amsterdam, Zaan region, Haarlem, Rotterdam, Utrecht, The Hague, Almere, Lelystad, Leiden.
Figure 3: Tightness indicator NVM historically low in 20Q4
Figure 4: Percentage of transactions above and below asking price in 20Q4
Figure 5: Duration of transactions in 20Q4
Capital is still available and transactions in new and existing homes remain at a satisfactory level. Nor is there yet any strong effect to be seen in the price level. The new figures for 20Q4 give no immediate cause to conclude that there is a strong trend reversal. In particular, the housing markets of larger cities in the Netherlands still appear to be holding up strongly, especially in the owner-occupier market. There is, however, evidence of declining consumer confidence, which may have a negative influence on willingness to buy and purchasing opportunities in the future.
As a result of the corona crisis, we also see that the number of inhabitants is not growing as fast, especially in cities that experienced a large influx from abroad before the corona crisis. As tourists stayed away due to international travel bans and restrictions, many Airbnb owners switched to renting out or selling their homes permanently. Expats also moved away, leaving high-end rental properties empty. As many Dutch people can hardly afford such rents or often choose to buy a home instead, prices in this rental segment have fallen. This has had a negative impact on rental prices in these cities (see figure 6).
In cities where rents were high pre-corona and where expats and tourism were flourishing, we see a decrease in median rents (see figure 6). Square metre prices have fallen particularly in the higher segment with rents higher than €1,500 per month. In the segment up to €1,500, we still see an increase in rents per square metre per month in most cities Despite the rent reductions in the cities Amsterdam, Utrecht, The Hague, Leiden and Haarlem, square metre prices per month remain the highest here. Amsterdam also has the highest square metre prices at rent level with €23.30 in the fourth quarter of 2020, see also Figure 7.
Figure 6: Development of rental price per sqm per month on annual basis (20Q4 compared to 19Q4)
Figuur 7: Mediane huurprijs per m² per maand in 20Q4
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