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Everything you need to know is included in our Holland Property Pack
Are you considering buying real estate in the land of Windmills? Are you questioning whether now is the best time to proceed?
Various opinions exist regarding market timing. Your Dutch friend might suggest that now is the ideal time to buy property, whereas your colleagues in Amsterdam may think that prices will soon decline.
At Investropa, when we create articles or update our pack of documents related to the real estate market in the Netherlands, we trust facts and data, not opinions or rumors.
We have thoroughly examined all the official reports and statistics available on government websites. Now, we have a comprehensive database of reliable information and we can help you determining whether it is currently advantageous to purchase real estate in Holland.
Happy reading time!
How is the property market in Holland currently?
The Netherlands is, today, an extremely stable country
Positive
If you want to invest in real estate, prioritize stability as it reduces risks and provides security. It is an information you need as a foreigner looking to buy a property in Holland.
You most likely already know that Holland is widely known for its exceptional stability. The last Fragile State Index reported for this country is 19.5, which one of the highest values in the world.
The Netherlands is an extremely stable country today due to its robust democratic institutions and a strong social welfare system that ensures economic equity and social cohesion. Additionally, its strategic geographic location and highly developed infrastructure support a thriving trade-based economy, further contributing to national stability.
Now, let's shift our focus to the economic forecast.
The Netherlands will keep growing
Positive
Second thing to do before investing in Real Estate: evaluate the country's economic performance.
In accordance with IMF projections, Holland will, in 2024, grow by 0.6%, which is a bit disappointing. If we take 2025, we're talking 1.3%.
However, this low number is just for the short-term, as Holland's economy is expected to increase by 6.9% during the next 5 years, resulting in an average GDP growth rate of 1.4%.
A moderate growth rate in The Netherlands means that property values are likely to increase steadily over time, providing a reliable return on investment without the risk of a sudden market crash. Additionally, stable growth often reflects a healthy economy, making it a safer environment for long-term property investments.
Now, let's delve into other metrics worth exploring.
Dutch business owners have a neutral outlook towards market conditions
Neutral
What is the perception of the Dutch regarding their economy? The GDP forecast alone is not sufficient to understand it. Fortunately, in The Netherlands there is an official metric that is frequently updated. This doesn't apply to every country, so we're in luck.
Measuring business leaders' confidence in the current and future economic conditions, the Business Consumer Index (BCI) is calculated by conducting surveys and assessments.
The Statistics Netherlands's data indicates that the Business Confidence Index is currently 1 for The Netherlands. It can be interpreted as a weak score.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 0.
In the Netherlands, the Business Confidence Index is currently at a minimal level. However, this doesn't necessarily indicate an impending crash in the property market. A minimal confidence score often reflects a temporary phase of uncertainty or caution within the business sector, which is a normal aspect of economic cycles. Therefore, it is crucial to assess other relevant indicators before deciding if it is the right time to invest in property in the Netherlands. Let's evaluate those indicators now.
The Netherlands is delivering less building permits
Neutral
Taking into account the number of construction permits issued can provide helpful insights when deciding if it's a good time to purchase property in a country. When more building permits are issued, it signifies a thriving and optimistic property market environment.
Unfortunately, the number of building permits delivered is decreasing in The Netherlands.
In the period of the last 12 months, according to Statistics Netherlands, the number of building permits granted by Dutch local institutions fell by 3%, from 69,661 to 67,558 units.
This is definitely a negative signal. Let's look at more data.
One last important point to consider is that fewer building permits result in a reduced supply of properties. If this is the case, it is likely that housing prices will increase in Holland in 2025.
Is the housing market in the Netherlands going through a correction?
Neutral
The Netherlands's home prices have increased by 47.3% in 5 years according to Statistics Netherlands.
It means that if you had bought a canal house in Amsterdam for $750,000 five years ago, then it would now be worth around $1,105,000.
Recently, there have been discussions about whether the Dutch housing market is experiencing a market correction, with some suggesting that it might be the case.
Stabilizing or declining prices shouldn't always be perceived negatively. The current period could indeed signify a minor market correction, presenting real estate investors with discounted prices. If so, it's a positive sign and an ideal time to consider buying a house in the Netherlands.
You can find a more detailed analysis of the real estate prices in our property pack for the Netherlands.
Everything you need to know is included in our Holland Property Pack
The Netherlands' population is growing and getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Holland, the average GDP per capita has changed by 4.5% over the last 5 years. Despite being minimal, there is still some observable growth. Furthermore, the Dutch population is growing (+6% in 5 years).
This means that, if you purchase a canal house in Amsterdam and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is set to increase in Dutch cities like Amsterdam, Rotterdam, or The Hague in 2025.
No high rental yields in Holland
Neutral
Rental yield is a typical gauge to analyze real estate investments.
It's the annual rental income of a property divided by its price. For example, if a Dutch property is purchased for €400,000 and generates €20,000 in annual rental income, the rental yield would be 5%.
Based on the data provided by Numbeo, rental properties in Holland promise gross rental yields from 3.3% and 6.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in the Netherlands.
It indicates a moderate level of income generation.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there might be a slight growth in the number of affluent tenants. Consequently, rental yields might increase in Holland in 2025.
Everything you need to know is included in our Holland Property Pack
In Holland, expect minimal inflationary effect
Neutral
Simply put, inflation is the ongoing upward pressure on prices.
It's when your regular bicycle rental in Amsterdam costs 15 euros instead of 12 euros a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
As indicated by IMF projections, over the next 5 years, Holland will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Holland is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Holland then?
Let's wrap things up!
2025 could be an excellent time to buy property in Holland, primarily because the country is known for its stability. The Netherlands has a robust political and economic environment, which makes it a safe bet for property investments. This stability is crucial for investors who are looking for a secure place to put their money, as it reduces the risk of sudden market fluctuations that could negatively impact property values.
Looking ahead, the Dutch economy is expected to grow by 6.9% over the next five years, translating to an average GDP growth rate of 1.4%. This moderate growth rate suggests that property values in the Netherlands are likely to increase steadily over time. For investors, this means a reliable return on investment without the fear of a sudden market crash. A stable growth rate is often indicative of a healthy economy, which further enhances the appeal of long-term property investments in the country.
Another factor to consider is the current state of the housing market in the Netherlands. The country is issuing fewer building permits, which could indicate a housing market correction. This reduction in new housing supply, combined with a growing population, suggests that demand for existing properties will remain strong. As the population grows and becomes slightly wealthier, the demand for housing is likely to increase, potentially driving up property values.
Moreover, rental properties in Holland offer promising returns, with gross rental yields ranging from 3.3% to 6.0%, according to data from Numbeo. This makes buying property not only a good investment for potential appreciation but also a viable option for generating rental income. Additionally, the Netherlands is expected to experience minimal inflationary effects, which means that the purchasing power of your investment is less likely to erode over time. All these factors combined make 2025 a potentially opportune time to invest in Dutch real estate.
We hope this article has offered you practical support!. If you need to know more, you can check our our pack of documents related to the real estate market in the Netherlands.
-Will real estate prices go up in the Netherlands?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.