Market in Depth

House price boom in Holland continues strong

Lalaine C. Delmendo | July 06, 2021

The house price boom in Holland continues strong, amidst rising demand, coupled with chronic supply shortages.

In Amsterdam, the capital, the price of existing homes rose by 5.3% during 2020 (4.2% inflation-adjusted), to an average of €510,919 (US$611,057), according to Statistics Netherlands (CBS). It was the highest price ever recorded and the seventh consecutive year of annual rises. Nationally, the average house price accelerated by 8.6% (7.4% inflation-adjusted) to €334,488 (US$400,046) in 2020 from a year earlier, following a y-o-y rise of 7.2% in 2019.

All property types rose in price, nationwide, during 2020.
  • Apartment prices rose by 8.2% (7% inflation-adjusted), to an average of €295,837 (US$353,820)
  • Terraced house prices rose by 8.2% (7% inflation-adjusted), to an average of €306,563 (US$366,648)
  • Detached house prices rose by 9.7% (8.5% inflation-adjusted), to an average of €488,251 (US$583,946)
  • Semi-detached house prices increased 8.6% (7.2% inflation-adjusted), to an average of €352,301 (US$421,350)
  • Corner houses saw price increases of 8.8% (7.6% inflation-adjusted), to an average of €321,147 (US$384,090)

After a housing boom lasting almost 15 years, the Dutch housing market weakened in 2008, and only began to recover in 2014. From Q1 2014 to Q4 2020, house prices rose by 52% nationwide, with Amsterdam registering spectacular price growth of almost 84%.

During 2020, the number of dwellings sold in the country rose by 7.7% to 235,511 units from a year earlier, following steady sales in 2019, according to CBS. In contrast, completions fell 3.1% from a year earlier, to 69,322 units. This worsens the housing shortage in the Netherlands, which was estimated at about 200,000 units last year.

“The pressure on the housing stock is being exacerbated by the fact that not enough additional new homes are being built to meet housing needs. The shortage of new build homes means that people are less inclined to put their house on the market and move to a new build home,” said Rabobank Economic Research.

The Dutch housing market is expected to continue to grow strongly this year, despite the pandemic. “We expect continuing supply shortages and the low interest rate environment to keep driving up house prices,” predicts Rabobank Economic Research. “For this year we forecast robust house price growth of +8.0 percent.”

Netherlands house price chart
Yet the wider economy has been adversely impacted by the pandemic, with GDP contracting by 3.8% in 2020, in contrast to a 1.7% growth in 2019, mainly due to a decline in household consumption, investments and trade balance, according to CBS. It is slightly worse than the 3.7% contraction in 2009 and the biggest decline ever recorded by the CBS.

The economy is projected to grow by 1.8% this year and another 3% in 2022, according to the European Commission. The Dutch economy grew by an annual average of just 1.4% from 2010 to 2019.


Analysis of Netherlands Residential Property Market »

Rental Yields

Rental yields remain attractive in The Hague

Gross rental yields from apartments in the Netherlands continue to be attractive. The returns on investment are not princely - but they beat those in many other countries, especially given the excellent security of the Netherlands, its stability, rule of law, generally vibrant economy, and good long-term prospects.

In Amsterdam, yields on apartments range from 3.7% to 5.3%. As usual, smaller apartments return higher yields than larger.

In The Hague, yields range from 5.6% to 6.4%.

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.

Read Rental Yields »

Taxes and Costs

Taxes are generally high in the Netherlands

Rental Income: The income tax on renting residential property is quite high, though the tax is not really an income tax. In reality it is a flat tax, with 30% levied on the assumed rental yield. As of 2017, the applicable deemed rental yield depends on the value of the assets.

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.

Read Taxes and Costs »

Buying Guide

Total transaction costs are moderate in the Netherlands

Total transaction costs are between 6.63% and 9.86% of the total dwelling price for existing houses, which is moderate by international standards. The bulk of these costs are paid by the buyer, including the transfer tax,legal fees and registration fees. Real estate agent’s commission at 2% to 4% (plus 21% VAT) is shared between buyer and seller.

If the property is newly constructed (or less than two years old) the transfer tax is replaced with the 21% VAT.

Read Buying Guide »

Landlord and Tenant

Almost impossible to evict tenants in the Netherlands

Dutch rental market practices are pro-tenant.

Netherlands Amsterdam housesRent: 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.

Read Landlord and Tenant »

ECONOMIC GROWTH

Pandemic-induced economic recession

The Dutch economy is heavily dependent on foreign trade, with exports accounting for 83% of the country’s GDP, making the economy very susceptible to external shocks. For instance the euro crisis sent the Netherlands’ economy into a recession in 2011 which continued in 2012 and 2013, with economic contractions of 1.1% and 0.2%, respectively.

Now, the COVID-19 pandemic is crippling the economy again.

The Dutch economy contracted by 3.8% in 2020, following a 1.7% growth in 2019, mainly due to a decline in household consumption, investments and trade balance, according to CBS. It is the biggest decline ever recorded by CBS.

Netherlands GDP inflation
In the first three months of 2021, the Dutch economy remained “firmly in the recession stage,” according to the CBS. As of mid-March, 8 out of the 13 macro-economic indicators in the CBS Business Cycle Tracer were below their long-term trend.

The economy is projected to grow by 1.8% this year and another 3% in 2022, according to the European Commission. The Dutch economy grew by an annual average of just 1.4% from 2010 to 2019.

The Dutch government recorded a budget deficit of around 6.2% last year, in contrast to a surplus of 1.7% of GDP in 2019 and more than twice the allowable limit under the EU rules.

Gross public debt has risen to around 58% of GDP in 2020, sharply up from 48.6% of GDP in 2019. This remains slightly below the permissible upper limit of 60% stipulated by the EU Stability Pact.

Inflation inched up to 1.9% in March 2021, the highest since December 2019, mainly due to faster increase in prices of housing and furnishings, as well as transport. Inflation is expected to increase to 1.4% this year, from just 1.1% in 2020, based on estimates released by the European Commission.

In February 2021, the nationwide unemployment rate was 3.6%, unchanged from the previous month and the lowest level since May 2020, according to the CBS.
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