In Amsterdam, the price of existing homes surged by 14.7% during the year to Q2 2016. Nationally, the average house price rose by 4.65% (4.65% inflation-adjusted) to €242,089 (US$270,002), according to Statistics Netherlands (CBS), and by 1.21% (1.21% inflation-adjusted) during the latest quarter (Q2 2016).
All property types rose in price, nationwide, during the year to Q2 2016.
- Apartments saw the biggest price increase of 6.8%, to an average of €196,566
- Terraced house prices rose by 5.1%, to an average of €226,307
- Semi-detached house prices increased 4.4%, to an average of €267,352
- Detached house prices rose by 2%, to an average of €359,902
- Corner houses saw price increases of 5.4%, to an average of €235,471
After a housing boom lasting almost 15 years, the Dutch housing market weakened in 2008, and only began to recover in 2014. Based on NVM’s figures:
- In 2008, house prices fell by 5.33% (-7.55% in real terms)
- In 2009, house prices dropped by 1.5% (-2.4% in real terms)
- In 2010, house prices rose by a meager 0.96% by dropped 0.65% in real terms
- In 2011, house prices dropped by 3.63% (-6.06% in real terms)
- In 2012, house prices fell by 6.7% (-9.54% in real terms)
- In 2013, house prices increased by 0.24%, but dropped 1.25% in real terms
- In 2014, the housing market started to recover, with house prices rising by 3.65% (2.7% in real terms)
- In 2015, house prices rose by 5.15% (4.47% in real terms)
Demand is surging. Property transactions rose by 16.1% to 178,293 units, the most since 2008, according to Statistics Netherlands (CBS). In the second quarter of 2016, dwelling transactions rose 23.6% compared to the same period last year, with sales up in all major cities and municipalities.
Rabobank forecasts that nationwide house prices will increase by 3.5% to 5.5% y-o-y this year and by 5% to 7% in 2017. Transactions are also expected to rise from 178,000 units in 2015 to around 200,000 to 220,000 units next year.
The Dutch economy expanded by 1.9% in 2015, and GDP growth of 1% in 2014. Economic growth is expected TO BE 1.7% this year.
Analysis of Netherlands Residential Property Market »
In Amsterdam, yields on apartments range from 4.5% to 5.7%. As usual, smaller apartments return higher yields than larger.
In The Hague, yields are around 6.5%.
The Hague is a less expensive city to buy in, and really merits consideration by investors. First, it is the seat of government, so most foreign embassies in the Netherlands and 150 international organisations are located in The Hague, including the International Court of Justice and the International Criminal Court. Several large international businesses have their headquarters in The Hague, including Shell, the world´s second largest company in terms of revenue. This means that there is an ideal group of expatriate tenants to whom owners can rent their apartments, as 26% of the jobs in The Hague are either offered by the Dutch government or by international institutions. In addition, for those interested in the short-term rental market, tourism is important, with 1.2 million tourists a year.
English is spoken virtually everywhere in the Netherlands, and non-Dutch speaking property investors from abroad will experience no difficulty navigating the environment.
Round trip transaction costs are mid-range on residential property in the Netherlands, see our Netherlands transaction costs analysis and our Netherlands transaction costs compared to other locations.
Capital Gains: For the sale of real estate that was used as part of a rental business enterprise, capital gains are taxed as part of income in Box 3 i.e. 30%.
Inheritance: Wealth acquired by inheritance from an individual who has properties in the Netherlands is subject to inheritance tax. Different rates apply, depending on the relationship between the heir and the testator where there are three categories.
Residents: Residents are taxed on their worldwide income.
If the property is newly constructed (or less than two years old) the transfer tax is replaced with the 21% VAT.
Rent: Landlords can set the rent freely and adjust the rent, for properties above the ‘liberalization rent limit’ of €604.72 per month. A deposit of two to three months is customary.
Tenant Security: The most dangerous aspect for a landlord in the Netherlands is that once a property has been rented, tenants are almost impossible to evict. The basic Dutch rental contract is one of unlimited duration. Landlords can only give notice in strictly defined cases, and it is extremely difficult for owners to evict tenants once they are established.
In 2015, the Dutch economy expanded by 1.9%, after GDP growth of 1% in 2014. In the second quarter of 2016, the Dutch economy grew by 2.3% from a year earlier, following a 1.5% annual growth in Q1 2016, according to CBS. It was the ninth consecutive quarter of robust growth, thanks to rising investment, domestic consumption, and exports.
The national debt continues to decline. During the recession, the government boosted the economy through stimulus programs and bank bailouts, resulting in a budget deficit of 5.6% of GDP in 2009, 5.1% of GDP in 2010 and 4.3% in 2011. As a result, the country’s debt rose to 71% of GDP in 2012, far higher than the permissible upper limit of 60% stipulated by the EU Stability Pact. In 2015, the gross public debt remains high at 65.1% of GDP, from 68.8% in 2014 and 68.6% in 2013.
On the other hand, the public budget deficit fell to 1.9% of GDP in 2015, from 2.3% of GDP in 2013 and 2014 and 4% of GDP in 2012. The deficit is projected to fall further to 1.5% this year and to 1.25% in 2017, while the gross public debt is expected to decline slightly to 64.75% of GDP this year and to 64% of GDP in 2017.
Consumer prices dropped 0.3% in July 2016 from the same period last year, from steady prices in the past three months, according to CBS. It was the first time since December 1987 that consumer prices are cheaper compared to a year ago. Overall inflation is expected at 0.25% this year, from 0.2% in 2015, 0.3% in 2014, 2.6% in 2013, 2.8% in 2012, and 2.5% in 2011, based on figures from the IMF.
In June 2016, the seasonally-adjusted nationwide unemployment stood at 6.1%, down from 6.9% a year earlier, according to CBS. Unemployment for men was 5.7% while it was 6.6% for women. In June 2016, there were 550,000 unemployed people in the country, down from 611,000 people in a year earlier.
Nationwide unemployment is projected at 6.4% this year and 6.1% in 2017, according to the European Commission.