If there’s ever a right time to buy a house in the Netherlands, that time could be now. Expat Mortgages presents this article to help you figure out if this is the right move for you.
According to Dutch bank ABN AMRO, housing prices have tumbled by 10 percent across the country in the past year. However, real estate agencies, as well as official figures from the land registry, say that there are signs that the market is stabilising.
More houses available after the summer
After the summer months have passed, more Dutch people spruce up their homes for sale and put their properties on the market; at the same time some private investors are selling their buy-to-let homes. This means that at a time of better prices, where the power is much more in the hands of the buyer, there could be more choice.
Often, Dutch people will not sell their house during their summer holidays, so in July the supply goes down and only a few houses get sold in August. But when their kids go back to school, people start selling their houses again.
Supply shortage
Housing in the Netherlands is in short supply because there has not been enough house building in the past decade to accommodate the growing population. Also, more people want to live in smaller households than they did in the past.
While the Dutch government has announced a push to build 900.000 new homes by 2030, there are already signs of problems. Firstly, building plans are being approved at a very slow rate and many construction projects for new-build homes are being cancelled. There is also an increasing cost for developers to borrow money for such projects. Consequently, house building is expected to fall by 3,5 percent in 2023.
The shortfall for houses will only get bigger because almost no permits are given and the supply of new-build houses is only going down. It will take a few more years for the solution. We're at a 390.000 shortfall now, when a year ago it was 300.000. The supply is not enough for the demand.
At the same time, though, there are signs that interesting properties could go on the market. According to Dutch media outlets, large Canadian and Swedish investors are considering whether they want to sell their housing stock. What is more, real estate agents see small investors starting to sell too.
The Affordable Rent Act
A new regulation, which will take effect starting January 1, 2024, proposes to make more rental homes part of the rent-controlled sector. This limits rental costs to 1.000 euros per month and a less advantageous tax situation, which are stimulating more professionals to sell their properties.
There are new rules coming in from the Dutch government making it less attractive to invest in properties. Transfer tax went up, properties will be taxed higher in wealth tax, and it’s less attractive to invest now compared to the time when the return on investment in your savings account was really bad, which led to a lot of people investing in shares, stocks, crypto, gold and property.
Now, countries like Belgium are reaching out to private savers with attractive government bonds. Additionally, more banks are giving out higher base interest rates in the form of higher-yield savings accounts.
We don’t know if Canadian, Swedish or other foreign investors are going to sell, but the alternative has become more attractive and we do see private investors selling. As a potential house buyer, you can say that’s good, although it doesn’t reduce the shortfall we have in houses.
Former rental properties
The trend in sale of former rentals actually makes another reason to buy more acute: if there is a lower supply of rental homes, the prices for renting will go up. Although overall rents dropped in the free market this year, properties located in big cities are still in high demand and it can be very hard to find a place to live.
Currently, landlords can still use short-term contracts, raise rental prices, and evict tenants after two years with a “no-fault eviction”.
Look into buying property
There will be more houses for sale because investors are selling their properties to their tenants. A very good tip is to ask your landlord whether they are interested in selling. In short: it’s a good time to buy a house.
Expat Mortgages helps internationals finance their “dream home” purchase in the Netherlands. You can contact their team via phone at +31 20 717 3908 or by email at [email protected].