Amsterdam Houses Head for Record Prices

(Bloomberg) -- Amsterdam’s homes are going for record prices as more expats move into the city.

House prices in the Amsterdam region rose 8 percent in the fourth quarter compared to the year earlier, statistics from realtors association NVM showed on Thursday. The median transaction price was 448,000 euros ($517,000), a new record. Although the pace of the rise was the slowest in almost four years, it was the 22nd consecutive quarterly price increase.

Take this property for sale at Hoofdweg 398, for example. Only a block away from the A10 highway, a road that locals jokingly call the border of Amsterdam, the two-bedroom house -- just enough for a couple with one child -- is commanding an asking price of a whopping 555,000 euros. In the eastern part of the Dutch capital, another seller is asking 265,000 euros for a room measuring 28 square meters.

With the city now too expensive for many, prices may start heading south, NVM Chairman Ger Jaarsma said in a statement. “In certain regions, and specifically in Amsterdam, the continuing rise of house prices is slowly nearing its end,” he said. “The affordability of housing, especially for households with less money to spend, has declined and consumers are turning away.” Quarter on quarter, the price gain in Amsterdam was 0.9 percent.

Amsterdam Houses Head for Record Prices

A large part of the latest buying wave in Amsterdam comes from expats, many of whom are heading there because of Brexit and as the city works on luring foreign companies. Numbers from the national statistics bureau CBS showed last week that on balance more than 15,000 migrants moved into the city between January and November. Together with new births, the influx has boosted the city’s population of 850,000 by about 1.2 percent.

On the flip side, an increasing number of locals are being priced out of the housing market -- more than 10,000 Dutch citizens on balance left the city over that period.

“We speak in English at roughly 50 percent of our viewings at the moment,” Jerry Wijnen, chairman of the Amsterdam realtors association MVA, said at a press conference Thursday, highlighting the body’s growing non-Dutch clientele.

Housing remains a hotly debated topic in Amsterdam, and the price increase is sparking tensions. Laurens Ivens, the city government official responsible for housing, last week tweeted that Amsterdam families are increasingly being squeezed out by the arrival of “richer people”. He also said he wants to give “Amsterdammers” priority for new construction, without defining who they are.

  • Although the expat influx is biggest in Amsterdam, there are similar trends in Rotterdam and The Hague, according to national statistics.
  • The Dutch capital has been successful in recent years in attracting and retaining jobs from foreign companies -- and more high-skilled employment may be on the way. At the moment, Amsterdam is in talks with “more than a hundred parties” that are looking to move to the Dutch capital as a result of Brexit, Udo Kock, the city official responsible for economic affairs, said last month.
  • To tackle the region’s housing shortage, Amsterdam’s government presented ambitious plans in May to add an extra 7,500 houses a year through 2025. A third of newly constructions will be earmarked for social housing with capped rents, so people with lower incomes can live in the city.
  • In the Netherlands as a whole, the median transaction price increased 10.3 percent in the fourth quarter to 298,000 euros, following mostly the same path over the years as the capital, only with more modest growth spikes.
  • ABN Amro said Wednesday it expects the growth in Dutch house prices to weaken to 6 percent this year and to 4 percent in 2020. Still, the numbers are above the historical average as the mortgage rate continuous to be low and “the housing supply will stay tight in the coming years,” ABN’s economist Philip Bokeloh said.

©2019 Bloomberg L.P.