Edition: January 1st 2019, Written By: Seringe S.T. Touray
Business Insider puts the Netherlands in the top ten out of nineteen hottest housing markets in the world, behind just Ireland, Canada, Iceland, and China. Due to the housing boom, prices cause discomfort to local and international buyers.
Vibrations of foreign accents in the streets surrounded by Dutch revival architecture, canals and chiming bells in the bicycle lanes of carefree Amsterdam, decorated curtain-less 3rd-floor apartment homes, and antique windmills painting the skyline of the countryside are only some of the few characteristics that unite expats from different parts of the world in the liberal kingdom. Without reports declaring the real estate market unfavourable for a select group of the Dutch population due to the extent of foreign presence, it would seem the growing expat community yields nothing but pros. However, reports paint homeowners as chasers of the lucrative appeal by renting/selling to deep foreign pockets instead of the local average earner, sparking an increase in property values.
Renting properties to those within the expat community offers flexibility: with foreigners being likely to opt for short-term contracts, the homeowner may decide to rent again or occupy his/her property himself, or negotiate a more lucrative deal with the next foreign tenant. But this is one piece of the vicious housing puzzle. Discover other key factors that delve into correlations between housing price increases and expats, and why expats claim that just like Dutch locals, the housing market is no walk in the park for them either.
The Big Picture
The accelerated 2017 growth in the Dutch economy was greater than that of any other year in nearly a decade. This was in part due to the housing market gaining momentum alongside other factors of the economy, like the decrease in the unemployment rate and the increase in confidence among a significant portion of the population. A dazzling 242,000 homes were sold that year according to Rabobank, a record number in the history of the Netherlands. The economic pros of such growth are beyond doubt; yet on the flip side, a housing boom resulting in an increase in housing prices yields tremendous difficulty for low to middle-income earners as the soaring property values rapidly narrow their choices.
Supporting stats put the Dutch housing market into perspective. Statistics Netherlands (CBS) charts illustrate price increases in major cities in the Netherlands during the first quarter of 2017, including Rotterdam (13.2%), The Hague (9.1%), Amsterdam (17.2%), Groningen (14.7%), and Utrecht (17.6%), indicating a joint rise in property value. Major provinces were entered into a corresponding diagram in an effort to scrutinize additional figures behind the housing boom, showing similar price percentage surges in Zuid-Holland (10%), Noord-Holland (10.9%), Noord-Brabant (8.8%), and Gelderland (7.6%). CBS data furthermore points to a national average house price increase by 8.5% in the first 2017 quarter, demonstrating price increases for all different types of property sold within Dutch borders, namely apartment (7.6%), terraced (7.4%), detached (7.5%), semi-detached (5.5%) and corner houses (9%).
The number of expats residing in the Netherlands nears 100,000. Increase in the rate of private start-up organizations, accompanied by already established international companies bringing employees of different backgrounds, talents and skillsets contributes to the astonishing number. The Hague for instance is greatly invested in national and global security, legal and financial affairs, justice, and peace, being home to the International Criminal Court of Justice. The United Nations and The Hague Security Delta also join the list of international organizations within The Hague, Rotterdam, and Amsterdam areas comprised of tens of thousands of multinational staff. Brexit also had multinational companies fleeing London to absent themselves from uncertainty, and given the Netherland’s ever-growing popularity, it was never too far-fetched to expect a migration of multiple firms seeking shelter here.
The Dutch education system ranking in the world top 10, and the friendly, safe and social environment ideal for raising children additionally provide major incentives for foreign working parents considering moving to the Netherlands. The resulting growth in foreign recruitment drawing expats in at a recordbreaking rate stirs up unfriendly competition, whereby local Dutch buyers find it increasingly difficult to stand out in the housing market. According to the Nederlandse Vereniging van Makelaars (NVM), the timeline for the average house sale in the Netherlands has dropped from 75 to 56 days, highlighting the mounting competition – a direct consequence of the number of inbound foreigners.
Profit is the name of the game for Dutch investors, other property sellers, and homeowners in The Hague, Rotterdam, and Amsterdam among other popular regions in the Netherlands. The influx of expats points to a new and growing market of buyers resulting in average property prices climbing, according to NVM reporting. Profit, the climax of all transactions in any given enterprise, is ensured here by the security of renting or selling a property to an expat with an above-median salary. In the case of rentals, expats offer flexibility as an added benefit, since the foreign tenant prefers a short-term contract, ultimately allowing the homeowner freedom of decision – of whether or not to later extend the housing contract to the same tenant, rent to a different tenant, or occupy the property him/herself. The owner is thus endowed with an arguably unfair advantage in the booming market, while the local buyer falls victim to the brutal noise of profit-maximizing decisions.
We wouldn’t be talking about skyrocketing housing prices had it not been for the immense popularity of the Netherlands. To this day, Dutch experts continue to trace this increasing trendiness (so to say) with specific focus on usual suspects Rotterdam, The Hague and Amsterdam to determine/forecast the real estate climate (and its economic impact) in the upcoming years. Economic research agency Decisio reported in 2015 that 60,000 foreigners lived in Amsterdam alone, a growth from the 40,000 reported to have occupied the city in 2009. Confronting increasing demand in the housing market, the municipality of Rotterdam introduced a new website focused on guiding expats looking into its city, by proving information on real estate, living, and working. By implementing this tool, the city continues to put marketing effort into attracting more foreigners from overseas, international firms responsible for the recruitment of foreign workers, and expats already settled here.
To highlight the popular kinds of properties, Vastgoed Journal reported on the high demand for residential towers in Rotterdam, particularly located in the city centres (with convenient access to international schools, etc.), apartments situated in the suburbs, and single-family homes.
The expats’ plight isn't unnoticed either, mostly due to the counterpunch by the expat community disputing claims that the real estate market is a walk in the park for them as opposed to the Dutch local buyer disadvantaged in the housing boom. Stats showing evidence of the expat being the growing target of sellers is true. But while this resembles an advantage, it may be construed as a plague to expats in their quest for equality in the Dutch housing market: they are faced with higher housing costs demanded by property owners who consider them high-income earners, limiting their ability to negotiate fairer prices as would be demanded by some locals.
This doesn’t even take into account the occassional language barrier that poses another level of difficulty to expats when dealing with homeowners, or the intense competition they face among themselves in the midst of the so-called boom. Being outsiders oblivious to the ins and outs of the Dutch market, bearing in mind that most advertising is driven by word-of-mouth ripple effects more easily accessible to the locals, plunges the foreigner into further disadvantage.
Travel & tourism
It’s might be hard unearthing cons linked to these two words, especially giving their contribution to global economies. But the steady increase in travel can be blamed in part for the increase in housing prices typically regarding short-term rentals, making it difficult for Dutch locals to vacation at holiday-friendly locations. In 2016, tourism accounted for over 10% of the global GDP, generating over US$7 trillion and being the direct cause of one in ten jobs worldwide. The Dutch tourism sector continues to grow in importance, with the volume of inbound travels discovered to have been on a consistent rise in the past few years as confirmed by the number of international travellers travelling to the Netherlands short-term.
Often, travel and tourism do more good than harm to any economy and in people’s lives. But the side-effects don’t leave many as optimistic when their personal finances are negatively impacted by the rise in foreign visitors. According to Statista, forecasts pointed to the number of inbound tourists reaching 16.2 million in 2017, double the number of tourists that landed in the Netherlands in 2010. Without increasing income, without favourable government regulations to counteract the negative effects of the surge in housing prices, local buyers of low to middle-income households may continue to face financial drawbacks of increasing property prices.
A dire forecast
If you’re among the ones negatively impacted by the housing boom, and are looking to experts in search of optimism for the future, you might want to look elsewhere. As of yet, the expert opinion on the next few years remains a consensus which indicates a rise in the demand for housing and thus further increase in property costs. As Rabobank projections link an 8% increase in property prices to 2018, 2019 is set to see a growth of 7%, putting the price of the average house in the Netherlands at € 300,000 next year. Like the aforementioned factors, these can be validly linked to the expanding expat community which shares similar growth forecasts in coming years, keeping the housing demand at a steady rise. Factors like minimum wage rises, interest rate changes, and government-imposed regulations might play a role in offsetting the disadvantages to the average earner, hence the growing efforts by Dutch institutions to shed more light on the problem.
With the Netherlands poised to welcome more foreign workers, and the housing market projected to expand beyond its current scope, some have even asked for government intervention, a view opposed by free-market advocates voicing opinions against over-regulation and excessive politics injected into people’s personal affairs.