Just recently, Warren Buffet, one of the most successful investors in the world and the primary shareholder and CEO of Berkshire Hathaway, announced in his newsletter that the American property market has seen the worst. He doesn’t expect the market to see prices as low as before the crisis. According to Buffet, the bubble has burst and it has now bottomed out.

What about Holland?

The last quarter of 2009 showed a decline in prices of 2 percent compared to the last quarter 2008, whilst we saw a fall of 4.9 percent in Q3 and 5.6 percent in Q 2.

Interestingly, the last quarter of 2009 saw an increase in the volume of houses sold. This is partially to do with better terms available when applying for mortgages under National Mortgage Guarantee. This particular mortgage is accessible for all EU citizens and/or non-EU citizens with an indefinite residence permit.

There are differences between the regions however; in Almere and Eindhoven prices came down because of a mismatch between supply and demand. In the The Hague area, Rotterdam and Amsterdam prices stabilised. The NVM (Association for Estate Agents in Holland) expects prices to stabilise and an increase of 15 percent on the sales volume.

 Canal houses, Amsterdam

That could indicate that we’ve also seen the worst in Holland, but there are some key points need to be kept in mind.

First, The Netherlands is one of the most densely populated countries in the world. With a land area of 41,526 square kilometres (18 percent of it covered by water) and a population of 16.4 million, the density rate is about double that of the UK, and about 13 times that of the USA. This lack of space translates into a strong demand for housing. Second; the discussion about tax-relief on paid interest related to loan(s) for your primary residence is always on the agenda for some political parties. However with current elections coming up and the recent collapse of the Government, property experts believe this topic will be avoided by most politicians.

Chris Van Maasdijk, Partner at Expat Mortgages in Amsterdam, says, “In terms of thinking about whether to buy property, the market is certainly more attractive at the moment compared to one to two years ago. The chance of being able to make up for at least the additional costs when purchasing now or even make a nice profit within the next three to five years is very realistic.

“Funnily enough people tend to invest emotionally instead of rationally, making them wait for the market to come down even more. Then, when prices start to rise, they begin to think that it might be a good time to buy...having missed out on earlier opportunities!”

The general advice for expats is usually the same however; you should only consider buying property if you see yourself staying in the Netherlands for at least the medium term. Having to leave after only one to two years could very well see you losing money due to fees or result in your having to rent out the property just to cover costs. So it’s a matter for careful consideration.

 View from the Westerkerk tower, Amsterdam

The contrasting picture in different areas of the country is important. Location is king. As we have seen above, prices in the big ‘Randstad’ cities seem to have stabilized but there will be differences even within the cities themselves. Buyers should therefore take advice from a trusted source before going ahead.

Chris Van Maasdijk is a partner at Expat Mortgages (www.expat-mortgages.nl), a mortgage advice firm specializing in finding mortgage solutions for expatriates.




Craig Welsh runs the Amsterdam branch of the Spectrum IFA Group (www.spectrum-ifa.com), a licensed independent financial planning firm with offices across Europe. 

 
Both experts are available to answer your questions via our Ask-the-Expert section. Chris Maasdijk can be found under the Mortgages category and Craig Welsh under Finance.

March 2010
 

Photo credits: lord; van Ort; roryrory; Leithcote