The housing market in major Dutch cities
Melanie Hekwolter of Hekhuis,
Rob Nijskens () and
DNB Occasional Studies from Netherlands Central Bank, Research Department
The Dutch housing market is recovering, but not without considerable regional differences. Major cities such as Amsterdam, The Hague, Utrecht and Rotterdam, as well as medium-sized cities like Groningen and Eindhoven, are witnessing stronger house price rises than the rest of the Netherlands. Moreover, housing market dynamics vary from city to city. How to explain this? Are the cities a harbinger for the rest of the country? This study concludes that, despite signs of overheating in the large urban housing markets, there is no credit-driven bubble as yet. Spiralling house prices in the cities are mainly attributable to scarcity pricing. Additionally, more and more buyers are also contributing own funds. Ongoing migration to the cities is spurring demand for urban housing and supply is failing to keep pace. The result is a shortage of affordable housing, particularly in the non-rent regulated rental sector. This is putting middle-income earners in a tight spot. Supply in the non-rent regulated sector is growing slowly due to planning restrictions on new-build developments, a lack of planning and construction capacity, and the absence of effective incentives for municipalities and housing associations. The government needs to do more to encourage municipalities and housing associations to increase supply in the non-rent regulated sector.
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