The Dutch Housing Market: To Buy or to Rent in 2023?

Finding long-term accommodation in the Dutch housing market is one of the first challenges any expat face in the Netherlands. There is a range of matters making that complicated whenever you attempt it. There may be the matter of relocating family or pets to consider. You may need to find somewhere close to work and or school. And that’s before you reckon with the economy. Sometimes it can all be a bit overwhelming, so that’s why it’s nice there are companies out there that can help. Two of these such companies are Corporate Housing Factory or ServicedApartments.nl

State of the market

Throughout 2022, inflation and interest rates both rose. This saw house prices and rental rates spike last year. July marked a peak for the housing market. Then, having been rising for years, prices began to decline. According to real estate association NVM, this saw prices fall 6% yearly.

Looking ahead, as the inflation rate across the Eurozone falls to 8.5%, this trend may continue. Good news if you are looking to move here for the long-term – though prices are still “overheated”. The NVM also found Dutch housing price increases were among Europe’s five biggest.

Having risen so far, there is much more room for decline in the future. Looking ahead, housing prices are expected to fall further in 2023. Statista’s quarterly pulse monitor shows Dutch house prices will shrink by 2.5% in 2023. However, the driving forces behind this mean it is unlikely to benefit many buyers. The price falls are due to declines in purchasing power – thanks to the higher cost of borrowing and worsening economic conditions at the start of the year.

More rising interest rates look set to compound this through 2023. According to research by advisory firm Expat Mortgages, the rate will likely vary between 4% and 5% in the coming period.

At the same time, rents across the Netherlands are declining. The average square meter price for a rental home in the country’s private sector fell by 1.1% in 2022’s final quarter and is likely to decline further through 2023 for similar reasons to the market for buyers. As a result, new tenants in the Netherlands face an average of €16.59 per square meter for a rental home. But as with the housing market, this does not necessarily mean things are ‘more affordable’ – as the cost-of-living crisis continues to eat into earnings and decrease spending power.

At the same time, it is important to note this has not been a uniform decline. In particular, not for the five largest cities of Utrecht, Amsterdam, Rotterdam, Eindhoven and Den Haag. Supply for rooms and flat-shares there has fallen. Meanwhile, demand among students and young professionals has risen. So, rents there have soared. In Amsterdam alone, rents increased by 10.9% in the fourth quarter, according to Pararius – and may grow further in 2023. And while there are new government limits on how much a landlord can raise the rent for existing tenants, this will not increase the asking price for new tenants. Not ideal if you are moving to access leading universities or take up early-career opportunities.

Renting vs Buying

At the same time, you may be weighing up whether you want to rent or buy might be better. Again, making such a decision in a new country can be overwhelming. Lucky for you, helping internationals adjust to the Netherlands is our speciality! You must consider some things as an expat when choosing whether to buy or rent in the Netherlands.

Flexibility

As with life’s biggest questions, whether it is best to rent or buy depends on you. What is right for your situation? Does your work often need you to move?

Several options are available here, but the most obvious is a short-term tenancy agreement. These last up to two years. A tenant can end the agreement at a notice period equal to the payment term. For most people, that is one month.

So, if it’s the flexibility you are looking for, consider renting – or make sure to have a mortgage which allows you to rent out your property if you move. A company like Corporate Housing Factory can get you started immediately and help every step along the way.

Security

Life circumstances are always liable to change, of course. The time may soon come when you are looking to settle down long-term. Upon arrival, you may already be looking to put down roots in the Netherlands.

Even if you don’t spend the rest of your life in your first home in the Netherlands, buying it is an important step. Unfortunately, breaking even on a mortgage can take three to five years. But, over that time, your house’s value should begin to grow – and enable you to invest in a home you may stay even longer in.

If long-term security matters most to you, home ownership can supply the financial and social stability you need.

Risk

Houses do not always gain in value – sometimes, it decreases. Whatever happens to the property’s price, you’re liable for mortgage payments in the Netherlands. If you’re happy where you are, that’s not the end of the world. But it could be a problem if you want to upgrade. Declining property values could mean you can’t sell your home at a high enough price to pay off what you owe. You may then be responsible for any residual debts.

This risk of residual debt is rare. Within five years of owning a home, you usually pay off approximately 10% of the loan. So, you’d only face residual debt if the price fell by more than 10%. While that seems unlikely, though, it is not impossible. The post-pandemic economy remains unpredictable. In contrast, these are not risks you will have to contend with if you are renting.

Please remember every investment comes with risk. If you are uncomfortable with that or need more financial security to take on such a risk, sticking with rental accommodation is the right way.
Rewards

Investing at a time when house prices are falling presents a financial opportunity. With prices dipping, you could prime yourself to reap the rewards when the economy turns a corner. Renting sees you paying off your landlord’s mortgage on a property they will enjoy the added value of. But monthly mortgage payments are, on average less than monthly rent.

Besides that, home ownership also brings with it other financial benefits. For example, mortgages have tax benefits which rent doesn’t. Interest on annuity or linear mortgages in the Netherlands is tax deductible. Rebates from the Dutch tax office could help your money go further as the cost of living rises in 2023 and beyond.

Buying a home can make you save while growing your wealth in the long term. However, buying is best suited to your needs if you want more from your home than just a roof over your head.

Maintenance

Owning any space comes with a set of liabilities renting it does not have. Many people still find ownership costs more than renting due to the expenses that it exposes them to. Along with property taxes, owners must also insure their property from damage. And they need to shoulder some of the costs of maintaining their house.

When renting, this is the landlord’s responsibility. But owners need to take care of pest control, painting, insulation, boiler care and many other factors. In the long term, climate change will increase that burden. Around 59% of Dutch land surface is prone to flooding, including 26% below sea level. You cannot afford to overlook that if you are considering buying a home – which, as we have said, is a long-term deal.

Maintenance responsibilities should not be taken lightly – in terms of time or money. However, with inflation spreading your resources thin already, taking on the burdens of home ownership may not be your best bet.

Health and wellbeing

Being in control of maintaining a space is not only a bad thing, though. If you love the space you live in, being able to love it in your own way is a key part of that. That includes re-designing it, changing paint, knocking through a wall, or even hanging a painting. But renting usually forbids that. Landlords often include clauses in contracts that prohibit any ‘damage’ from changing the color of the wallpaper, right down to tacking posters on a bare wall. They often also bar pets.

This is one of the reasons why homeowners tend to be healthier than renters. There is a psychological benefit to having agency over your living space. And there are physical ones, too. Time is of the essence when it comes to pest control or freezing without insulation in the winter. Owning the home, you can take the matter in hand immediately. Meanwhile, landlords may be responsible for maintenance in rental homes, but they need to do it better and on time. In that case, the mice in the attic or the black mold in the bedroom may end up staying in an apartment longer than you!
If you can afford it, nothing beats being the master of your own fate – home ownership trumps rental accommodation on that basis at any time.

A helping hand if you need a place to stay quickly!

All that should leave those looking to buy or rent with plenty of food for thought. But what if you’re already on your way to The Netherlands? What if your work has asked you to move immediately for the sake of a promotion, or your studies begin next month? You need to buy yourself some of the most precious commodities: time. Lucky for you, there are organizations in the Netherlands which can help you do exactly that!

Companies like Corporate Housing Factory or ServicedApartments.nl can help you with short-stay accommodations while deciding what to do. They provide a place to stay with an address where you can legally register across the entire Netherlands. Their apartments also provide fully-furnished kitchens, separate bedrooms, weekly cleaning services, and more. This can help you and your loved ones be comfortable while buying time for a longer move. If you’re looking for something more permanent immediately, consider exploring Corporate Housing Living