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Home rental prices in largest Dutch cities jumped 5 to 8 percent last quarter

Updated: Jul 18, 2023

Free market rental prices in the five largest cities in the Netherlands have jumped by 5 to 8 percent compared to a year earlier, according to an analysis of the last three months by home rental site Pararius. The price per square meter was being pushed up sharply, as the number of properties on the rental market have begun to disappear.

In the five largest cities, there was a 27 percent fall in the number of rental homes placed on the market in the second quarter of 2023 compared to a year earlier, Pararius said. The five biggest Dutch cities by population are Amsterdam, Rotterdam, The Hague, Utrecht and Eindhoven. The price increase was measured by calculating the average price per square meter in new lease agreements between tenants and landlords.

"This is a direct result of the accumulation of measures that the Cabinet has taken and still wants to take to improve the housing market," said Jasper de Groot from Pararius.

The sharp drop in supply, and the resulting price increase, was linked to the Cabinet's intervention in the housing market, which will remove incentives for landlords and housing investors next year by capping rents for large segments of mid-valued rentals.

Changes to asset tax rules also mean smaller housing investors have to pay more tax. Additionally, the official WOZ valuation of homes can no longer have as strong an influence on rental prices as in previous years, moving many homes into the social housing bracket.

As a result, many private market landlords have opted to put homes up for sale when tenants move out, instead of looking for new people to rent out apartments and houses. The changing market trend was not a surprise, De Groot said. "Tenants who cannot go to the social rental market and who do not want or cannot buy are at a disadvantage as a result."

It has also led to a situation where more and more prospective tenants have begun bidding above the rental prices when viewing homes. The amount over-bid was not factored into the Pararius analysis, as the firm only examined asking prices.

At the same time, the figures are somewhat skewed by the fact that rental prices are often significantly higher in the major cities. Across the entirety of the Netherlands, and not just the most populous cities, rental prices rose by about 0.4 percent compared to the second quarter of 2022.

However, the impact of the Cabinet's housing plans have also started to show nationally. There was a 12.8 percent fall in the number homes available for rent in the second quarter. A continued fall in supply nationally can also push prices up higher.

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