Affordability

The Dutch private rental market is becoming more and more expensive

The beforementioned results in an increased demand for rental housing in larger cities. This works out differently however, for social (regulated) rental housing and private rental housing. As rents are largely regulated in social housing, the effect on affordability remains limited. Instead, waiting lists for social housing in larger cities increase strongly.

The rising shortage of rental homes in the private sector on the other hand has resulted in declining affordability, especially in major cities. This is confirmed by the fact that in the private rental sector, the share of the disposable income which is spent on housing costs has risen considerably. This applies especially for multi-family housing, which comprise most of the housing stock in the larger cities in the Netherlands. In the graph below, the most recent data shows that the share of disposable incomes spent on housing costs is considerably higher among tenants renting from private landlords.

Compared to other European countries, rental homes in the private sector in the Netherlands have also become less affordable in recent years. The graph below shows the overburden rate of rental housing, the share of households which spend more than 40% on housing costs. 10 years ago, relatively few households in the Netherlands spent more than 40% of their disposable income on housing costs in the private sector compared to the Euro area. Later on this situation changed and the share became higher than the average for the Euro area, which was mainly the result of growing demand and limited supply in major cities.

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