Shortages are rising in urban locations

Looking at price increases alone, the statement could be made that the need is more pressing in the owner-occupied sector than in the rental sector all over the country. But a narrow focus on this price development could make us lose sight of the actual housing need.

After all, rising house prices in the Netherlands are not just the result of supply and demand ratios, but are also caused by a broad financial scope1, trust that this a good time to buy and tax advantages associated with buying a house compared to renting a house. Another factor is that rents in the private sector are so high in some locations that people are even more inclined to opt for buying a home.

The images below show that strong increases in purchase prices per sq. m. can be observed in locations where the population is expected to decline. One of these regions is eastern Drenthe, where the population is expected to decline but the largest relative increase in purchase price per sq. m. could be observed. Amsterdam, which boasts one of the most sizable stocks of rental properties in the private sector, showed a lower rent per sq. m. per month for a rental property in the private sector in the first quarter of 2021 compared to the first quarter of 2020 (-5%). This could be indicative of greater shortages in the owner-occupied housing sector than in the rental sector.

Nevertheless, actual shortages are mainly rising in more urban locations. In 2025, when housing shortages are expected to peak, the regions with the largest shortage will be urban regions. But these regions also boast a relatively large share of private sector rental homes. The demand for rental homes is also growing in these areas. This growing demand is mainly due to an increase in single-person households; a group that shows a greater demand for rental homes than households of two or more persons. Take Amsterdam for example, where the number of households between now and 2040 is expected to grow by 86,700, of which 77,800 will be single-person households.

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