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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 Holland, 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 22.1, which one of the highest values in the world.
The Netherlands has a strong economy and a long history of political stability, which has enabled it to remain peaceful and prosperous for centuries. Furthermore, the country has a robust system of checks and balances that ensures that all branches of government are held accountable and that the rights of citizens are respected.
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 2023, grow by 1%, which is encouraging. Regarding 2024, we're talking 1.2%.
This steady growth might keep going since Holland's economy is expected to increase by 6.5% during the next 5 years, resulting in an average GDP growth rate of 1.3%.
The projected moderate growth rate in The Netherlands means that property prices are likely to remain steady and not experience drastic changes, making it a safe investment for the long-term. Additionally, the moderate growth rate is still a good thing as it provides investors with the potential for some capital appreciation over time.
Now, let's delve into other metrics worth exploring.
Dutch business owners still don't express confidence in current market conditions
Negative
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 2 for The Netherlands. It can be interpreted as a weak score.
Unfortunately, we're on a descending trend. The score, 12 months ago, was at 10.
In the Netherlands, Business Confidence is not currently at its peak. However, this doesn't mean that the property market will necessarily crash. A lower confidence score often suggests a temporary phase of uncertainty or caution within the business sector, which is a normal part of economic cycles.
Therefore, it is important to evaluate other relevant indicators before determining whether it is the right time to buy property in the Netherlands. We will do it now.
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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 2024.
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 Holland.
Everything you need to know is included in our Holland Property Pack
The Netherlands' population is 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.
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 2024.
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 Holland.
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 2024.
Everything you need to know is included in our Holland Property Pack
In Holland, expect moderate 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 11.4%, which gives us an average yearly increase of 2.3%.
This data means that Holland could face inflation in the near future, which would lead to an increase in prices. Consequently, purchasing a property could become more expensive. However, if you buy now, there is a chance that your investment will appreciate, allowing you to sell it at a higher value in the future.
Is it a good time to buy real estate in Holland then?
Let's wrap things up!
Considering the available indicators, 2024 might not offer the most optimal conditions for property investment in the Netherlands, given a range of factors that warrant careful consideration. Although the country's stability and growth prospects are favorable, several concerning signals should be weighed before making investment decisions.
The negative trend of delivering fewer building permits is a notable concern. Reduced permits can signify a slowdown in the real estate development sector, potentially impacting future property supply and influencing property values.
Uncertainties regarding a possible housing market correction in the Netherlands and the lack of high rental yields are additional factors that might impact the attractiveness of property investment as an income-generating avenue.
Furthermore, despite the stability and growth potential, the lack of confidence expressed by Dutch business owners in current market conditions raises a red flag. Business sentiment often reflects underlying economic uncertainties that could impact the investment environment, prompting a cautious approach for property buyers in 2024.
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 Holland.
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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.
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