Outlook

The housing shortage in the Dutch housing market will continue to increase in the coming years, particularly in the major cities in the Netherlands.

"The desire to go from 75,000 intended new-builds to 100,000 is indicative of this continuing issue. "

The result is greater pressure on market parties, the government and housing corporations. Due to the landlord levy, however, housing corporations have limited scope for investment, and as a result, new-builds in the mid-priced segment will mainly have to come from market parties.

In larger cities such as Amsterdam, where only 5% of the total private rental sector is affordable for the average household, the need for these properties is especially pressing. For households with an income just above the social housing limit, more mid-priced properties are urgently needed. Still, the share of new-build rental properties remains limited, as demonstrated by the limited share of building permits for rental homes issued to these market parties.

Due to rising land prices and construction costs, the financial feasibility of new-build projects there is declining, and additional legislative changes are putting further pressure on this feasibility.

The impending consequence: growing frustration between market parties and governments and a further increase in the shortage in this segment, while additions to the rental sector could actually ensure a better balance between the owner-occupied housing sector and the rental sector.

More intensive cooperation between market parties and between market parties and the government is strictly necessary to curb housing shortages in the major cities. Both parties need each other, and both will have to compromise. Even more regulations and more requirements for new-build projects with the aim of improving affordability will most certainly not lead to the desired outcomes as these lead to more distrust and a reduced feasibility of new-build projects. The result is that the available capital of market parties is not fully utilised. Cooperation is therefore the only key to significantly improving the affordability of the private rental sector.

Key Findings

Need for more rental homes

Despite strongly-rising purchase prices (14.7%), also in regions with a limited qualitative housing shortage, the greatest need for more rental homes can be found in the major cities.

Mid-range segement

Partly as a result, rental homes in the Netherlands are still less affordable than owner-occupied homes. The shortage is especially visible in the mid-range segment.

Not affordable

In the five cities studied, the majority of private sector rental homes is not or almost not affordable to an average household in the same city.

Active rental home market

In view of the building permits issued, market parties aimed at rental homes are very active. However there are some exceptions. In Amsterdam, for example, fewer permits were issued to market parties with a focus on rental homes (at 5,212) compared to smaller cities such as Utrecht (9,390) and The Hague (5,742).

Government Policy

In 2021, considerable regulations were introduced on the housing market. This policy is mainly focused on improving affordability, but the downside is that the financial feasibility of new-build projects is reduced.

Transfer tax

This is mainly caused by the increase in the transfer tax, making institutional investors shift their focus from existing buildings to predominantly new-build developments.

Capital is available

In order to comply with the raised bar for new-build developments from 75,000 to 100,000, local and national governments and market parties must work together as intensively as possible. Institutional investors in particular have a large amount of capital available for investing, but cooperation is not truly getting off the ground as much as it should.

Sources Statistics Netherlands, Eurostat, Savills Research, ABF Primos


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Bas Wilberts

Director Investments

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Ronald Koemans

Associate Director Investments

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Martijn Onderstal

Director Valuation

+31 20 237 9955

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Raymond Frederiks

Consultant Reseach & Consultancy

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Raymond.frederiks@savills.nl


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For our Dutch readers – listen to the latest episode of our podcast De Onderste Steen:

There is persistent shortage of houses in the Netherlands – housing and rental prices are rising significantly. What do the investors think about these developments? Is it still worthwhile to operate in this market, or is the financial return too low? And how can investors be part of the solution to the housing shortage? Charlotte Harmsen will discuss this with Simon Kuijs, Investment Manager at Heimstaden, a leading residential real estate company.

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