Amsterdam's New Government Bets on Social Housing as Prices Soar

(Bloomberg) -- The Netherlands’ largest city has a new government -- and it’s tilting left with plans for a big increase in affordable housing.

That has realtors worried about a policy focus on social and cheaper housing, which may not solve Amsterdam’s overall housing shortage. During the campaign for the March 21 election the Greens, the centrist D66 party, and the Labor and Socialist parties -- which together hold 26 of the 45 seats in the city council -- all committed to social housing plans for the city of about 850,000. At a press conference on Thursday, their coalition confirmed that priority.

The alliance is tasked with addressing the needs of long-term residents who claim they can no longer afford a house as tourists rentals combined with purchases by expats and real estate investors drive up prices. All at a time when city officials continue to work to attract Brexit refugees, after Amsterdam in November won its bid to host the European Medicines Agency as its leaves London.

The new coalition plans 7,500 new houses a year, a third of which will be earmarked as social housing for low-income households. The share of social housing in certain areas of the city will be actively monitored to ensure it doesn’t drop below 45 percent.

Not Enthusiastic

“The housing plans are shortsighted, with too much focus on just the city and not the wider metropolitan area,” said Sven Heinen, a property broker and chairman of realtor association MVA. “It won’t be enough to change the shortages on the Amsterdam housing market. Adding more regulation on the market is not the way to go. All in all I am not very enthusiastic.”

Policy for the housing market in the Dutch capital, one of the four in Europe at risk of a bubble, according to UBS’s Global Real Estate Bubble Index, will be scrutinized by Amsterdammers -- as locals are known -- and real-estate investors alike.

Demand, spurred by a growing economy, combined with a shortage of houses has caused prices to jump quickly, data from realtors show. In the first three months of the year, prices climbed 12 percent from a year earlier to a weighted median of 407,000 euros ($477,411). That’s more than 50 percent higher than pre-crisis levels.

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First Step

“They realize there’s a problem with affordability, and that’s the first step,” Christian Lennartz, a senior housing economist at RaboResearch, noting that the new governing team wants to solve all problems through construction, which takes time. “In the beginning it’s just about building more houses, later they’ll have to see how to keep these houses affordable, but I don’t see enough yet in the accord.”

The new city government’s plans mark an acceleration of an earlier project to build 5,000 houses annually, Laurens Ivens, the socialist member of the city government, said at the press briefing. That goal is “pretty ambitious” though necessary, he said. Ivens was also a member of the previous city cabinet in charge of Amsterdam’s housing policy.

The first post-financial crisis coalition governing the city without Prime Minister Mark Rutte’s liberals presented its plans in Amsterdam’s Van Eesteren Museum, which is dedicated to the eponymous Dutch urban planner. Key takeaways include:

  • Visitors and tourists should contribute an additional EU105 million by 2022 through an increased tourist tax, among other measures
  • Maintaining 30-day cap on short-term private rentals such as Airbnb within city limits with more extreme measures such as a ban on holiday rentals in areas where the balance between residents and tourists has been “disturbed”
  • Expanding options and tools to counter vacancies of retail properties
  • Creation of EU150 million fund to transition the city’s energy needs away from natural gas by 2040
  • Cooperation with provincial and municipal authorities along the North Sea channel to move the city’s passenger terminal, where cruise liners carrying up to 3,100 passengers currently dock near the Central train station, out of the city
  • Amsterdam Marketing, the capital’s marketing agency behind the I Amsterdam campaign, will be transformed to promote culture, congresses and dispersion of tourists

The new city government’s four-year term starts on May 30 with Jozias van Aartsen acting as mayor after Eberhard van der Laan died in October from lung cancer.

©2018 Bloomberg L.P.

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