In 2017, the Dutch housing market gave a show of strength, with house prices in major cities across the country finally surpassing the peaks seen before the financial crisis in 2008.
This was excellent news for sellers, as confidence continued to return to the market, with multiple bidders competing for many properties. For buyers moving to the Netherlands, however, getting onto the ladder became increasingly difficult.
Indeed, research by the FD in May 2017 showed that as prices increased, around a quarter of properties in Amsterdam were bought without mortgages, with overseas buyers and parents helping their children among the main benefactors.
The Dutch housing market in 2017
Data from Rabobank estimated house prices in the Netherlands increased by 7.6% in 2017, with some of the larger cities leading the charge.
Official figures show a range of factors contributing to this increase. Interest rates remained low in 2017, while GDP increased steadily. Elsewhere, the squeeze on housing stock was keenly felt, with a projected 55,000 new properties being built each year nationally – well below the target of 70,000.
Prices in some cities – Amsterdam, Utrecht, Rotterdam and The Hague – surpassed pre-crisis levels in 2017, though in other provinces elsewhere in the Netherlands, prices remain below those recorded in 2008.
Late last year, Rabobank analysts warned of the risks of a housing bubble caused by increased savings and gifted money being used to fund rising property prices. Elsewhere, separate research by the estate agency group Savills showed a fall in investment in Dutch property, as landlords took their focus away from expensive city markets.
Property market confidence in the Netherlands
Research by the estate agency NVM in late 2017 found that in the third quarter of the year, the number of property transactions was only marginally higher than the year before – at 40,973 – though one in four homes was sold above its asking price, well ahead of the one in seven recorded a year earlier.
While confidence in the market remained high, the average house price in Amsterdam reached €506,000, as the capital and other cities in the Randstad become increasingly unaffordable, especially for first-time buyers.
Mortgage rates in the Netherlands
In 2016, home-buyers enjoyed very low mortgage rates, with 10-year fixed rate deals averaging less than 3%, and variable rate deals dipping to 2%, as lenders loosened their acceptance criteria.
The European Central Bank’s debt buying programme has continued to have an effect, with data from the Hypotheekshop last Autumn showing the average interest rate for a 30-year fixed interest mortgage was just 2.99%.
Despite this, affordability remains tough for many buyers in the Netherlands, and there are signs the days of historically low rates could be coming to an end. Mortgage rates in the Netherlands are now climbing, and in truth they are unlikely to revert back to the low rates buyers had previously enjoyed. With rates only going in one direction, this means now could be a good time to get a mortgage.
The Dutch housing shortage
According to NVM, the number of homes sold for €200,000 or less in the Randstad dropped by 67% year on year up to mid 2017, and affordable housing is increasingly looking like a thing of the past in major cities.
The housing crisis in Amsterdam has spread to other cities in the Netherlands, with more buyers now offering over the asking price. With fewer available properties, especially for cash-strapped young people, it’s a difficult market for home-buyers. This increase in prices means expats moving to the Netherlands are increasingly being split into two groups, depending on their financial backgrounds.
Expats tend to fit into different categories: there are some who have bought before and thus can afford quality properties in cities where prices are high. Others, however, who are less well off, tend to head out to the countryside or smaller villages, which means cheaper houses but much longer commutes. This is unlikely to change significantly in 2018. Data from Capital Value claims that the housing shortage could worsen this year, as new construction developments fail to close the supply gap. The estate agency services groups claims the housing shortage could reach 200,000 this year (from 178,000 in 2017), with Amsterdam and Utrecht the biggest victims of the squeeze.
Mortgage brokers for expats in the Netherlands
Expats looking to get clarity on their options when moving to the Netherlands should seek advice from a mortgage broker, who can offer expert advice on mortgages and walk them through the home-buying process.
A mortgage broker can help expats get a handle on buying property, including mortgages, tax liabilities and additional fees. A good broker should offer a flexible service to clients, whether that be travelling to meet them in person or offering consultations remotely via video conferencing.
Commission is forbidden here, so brokers instead offer services at set fees – the level of which depends on the buyer’s circumstances. For example, fees are higher for self-employed people as there are more complicated borrowing and taxation rules for a broker to navigate.
The Dutch housing market in 2018
Research from Rabobank predicts house prices are likely to increase by 8% in 2018, with average house prices predicted to rise from €263,000 in 2017 to as high as €300,000 by 2020.
A report released by CBRE predicted that a strong economy in the Netherlands means investors will increase their appetite for risk in 2018, focusing on more ‘unconventional’ locations – but with the caveat that the landscape will be dependant on enough high quality properties coming on to the market. It’s highly likely that house prices will continue to go up in the Netherlands, and there isn’t any expectation of a housing of collapse in the market. Buyers will continue to struggle to get sufficient finance to match rising house prices, so there is an expectation of seeing a drop in the number of mortgages granted over the next few years.