Savills News

Increase of disposable income and house prices goes hand in hand; Dutch housing market still affordable in international terms

Last year, the Netherlands experienced one of its largest rise house price rises in history; in the second quarter of 2018, house prices had risen by 10.4% compared to the same quarter a year earlier. Only six countries saw prices increase at a faster pace, including Hong Kong and Iceland. Despite a strong increase in the housing costs, Dutch housing remains affordable. People in the Netherlands spent 31% of their disposable income on housing costs, which is on average in international terms. This can be explained by the fact that the average disposable income in the Netherlands has grown along with the average house price. Because of the relative affordability, it is expected that investors will continue to invest in the Dutch housing market in the coming years. This is illustrated in research report ‘Spotlight on Residental property market – the Netherlands'.

 

The relative affordability of the Dutch housing market is also reflected in Savills Global Living report published this week. This report shows that the Netherlands scores well on the ratio between disposable income and house prices. Bas Wilberts, Director Alternative Investments at Savills: “Because of the attractiveness of the Dutch housing market, broad interest among investors remains. The housing market’s share in the total investment volume has risen from 18.5% in 2010 to 26.5% in 2014. Currently, in 2018, the housing market accounts for no less than 33.6% of total investment volume - a new record. So far in 2018, for the first time more has been invested in residential real estate than in the office market. Due to the stability of the Dutch housing market, we expect this share to remain high in the coming period. Because of the high prices in the major cities, investors will also look for opportunities in the regions; as is already partly happening now."

 

Jordy Kleemans, Head of Research & Consultancy at Savills: “When considering regional differences, it is striking that the ratio between disposable income and housing prices is by no means high across the whole of the Randstad. Particularly the areas around major cities show a favourable relative affordability. This includes municipalities such as Almere, but also the ‘Green Heart’ - the largely rural area which lies between the four major cities that make up the Randstad.”

 

The relative affordability of such municipalities is also reflected in the attractiveness scan that Savills has conducted of the housing market. The scan gauges the attractiveness based on scarcity, price, price trends and the disposable income of the residents in each municipality. The top five consists entirely of municipalities that are located close to Utrecht and Amsterdam. The first major city ranks number 24 according to our scan: Utrecht. Amsterdam ranks at number 40. Interest among investors is not confined to regional municipalities. Alternative investment categories such as student housing and care homes will also gain in popularity.

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