Prices Dutch unregulated housing sector reach new high

Square metre prices rise almost everywhere

Pararius quarterly rental report Q4 2021

For the second consecutive quarter the square metre price of rental homes in the Dutch unregulated sector continues to climb, according to figures from property portal Pararius. In the fourth quarter of 2021, new tenants paid an average of 5.3 percent more than in the fourth quarter of 2020. This is the largest percentage increase since the third quarter of 2018, when rents rose by 5.9 percent.

Property portal Pararius distinguishes three delivery forms for rental homes: shell, upholstered and furnished. Furnished rental housing is the most expensive per square metre; new tenants paid € 19.68 per square metre per month in the fourth quarter of 2021. This is 8.1 percent more than the year before. Upholstered homes had a square metre price of € 16.39 per month (+8%). For shell homes new tenants paid 20.9 percent more compared with the fourth quarter of 2020. The square metre price of shells was € 14.42 per month.

Nationally, the average square metre price of Dutch unregulated sector homes is based on these three delivery forms, and in the fourth quarter of 2021, this average amounted to € 17.02. This is the highest square metre price since the measurements by Pararius began in 2010.

The effect of COVID-19 has been very clear from the second quarter of 2020. Compared with the same quarter a year earlier, prices fell in percentage terms for the first time in years. The absence of expats and the cessation of tourists visiting the Netherlands led to an almost instant surge in available rental homes. In order to provide these vacant homes with tenants, many rental properties were reduced in price. This mainly happened in large cities where rental housing is generally much more expensive.

At the beginning of 2021, the expat market picked up again and from the second quarter there were no more decreases in rental prices. Now, rents are once more on the rise. Jasper de Groot, CEO of Pararius, expects that the current lockdown in the Netherlands could lead to falling rents again.

Provinces

The Netherlands is divided into 12 provinces. At provincial level, the average rents of homes in the Dutch unregulated sector have increased everywhere compared with the fourth quarter of 2020. The northern provinces of Drenthe (+16.1%), Friesland (+17%) and Overijssel (+10%) are still the three cheapest provinces in the Netherlands. In Drenthe, new tenants paid € 11.05 per square metre per month in the fourth quarter of 2020, in Overijssel this was € 11.58. Friesland is the only province with a square metre price below eleven euros: new tenants here paid € 10.66 per square metre per month, yet in this province rents did rise the most in percentage terms.

In the province of Groningen the average square metre price is higher: here new tenants paid € 14.23 per month, an increase of 4 percent from last year.

In the provinces of Gelderland (+8.4%), Limburg (+8.2%) and Zeeland (+9.5%), the average square metre price of unregulated sector rental homes is around twelve euros. New tenants paid respectively € 12.60, € 12.19 and € 12.43 per square metre per month. In the province of Noord Brabant, rents in the unregulated sector rose by 7.7 percent, with a rental home costing an average of € 14.07 per square metre per month in the fourth quarter of 2020.

With a square metre price of € 20.49, Noord-Holland is still the most expensive province in the Netherlands to rent a home. Rents here rose slightly by 0.7 percent. The high rent in this province is mainly borne by the popular, relatively expensive cities such as Amsterdam, Haarlem and Amstelveen. 

Zuid Holland and Utrecht, two other Randstad provinces, have a rent that is closer to the national average. In Zuid Holland (+7%) new tenants paid € 16.44 per square metre per month. Rents in Utrecht rose by 1.6 percent, and new tenants here paid an average of € 16.65 per square metre per month.

The G5: the five largest cities 

The G5 is made up of the five largest cities in the Netherlands - Amsterdam, The Hague, Eindhoven, Rotterdam and Utrecht. Amsterdam is the most expensive city to rent a home. Rents in the capital rose 1.7 percent compared with last year, with new tenants paying € 22.45 per square metre per month.

In the city of Utrecht (+2.9%) the square metre price was also above the national average of € 17.02. New tenants paid € 18.33 per square metre per month.

According to Rick de Jong, rental agent at Househunting real estate agency, supply and demand is also not in balance in Utrecht, which leads to high rents. “Utrecht is located in a very central location in the Netherlands. The city is easily accessible in relation to Eindhoven and Amsterdam, where many (international) companies are located. This location makes it a popular place to live for many Dutch people. The Lombok district, a district right next to the train station, is particularly popular and rents are very high here.”

According to de Jong, Utrecht is also a popular place to live for expats. They often set their sights on a house in one of the suburbs of Utrecht, where there is more space. “It concerns highly educated people from South Africa, for example, who are not used to living in the city centre. They prefer to live more spaciously close to the city. In neighborhoods just outside Utrecht, the demand for rental properties is therefore high.”

In The Hague (+6.7%), Rotterdam (+9.7%) and Eindhoven (+11.7%) the square metre price is just below the national average. New tenants paid an average of €16.89 for an unregulated sector rental home in The Hague, compared with € 15.76 in Eindhoven. In Rotterdam, also known as the port city, a rental home cost an average of € 16.98 per square metre per month in the fourth quarter of 2020.

Prices at district level 

Amsterdam 

Rents in three Amsterdam city districts rose by more than six percent compared with a year ago. This was the case in Amsterdam Centrum (+8.2%), Amsterdam Noord (+6.1%) and Amsterdam West (+7.5%).

In the Nieuw West (-1.2%) and Oost (-2.1%) districts, rents decreased slightly for new tenants compared with the fourth quarter of 2020. In the fourth quarter of 2021, a rental home in the unregulated sector cost an average of € 18.11 per square metre per month in Nieuw-West, and € 19.83 in Amsterdam Oost.

The average square metre price of rental properties in the center of Amsterdam is more than seven euros above the national average. New tenants paid an average of € 25.20 per square metre per month in the last quarter of 2021. De Groot emphasizes that Amsterdam is an expensive city to rent for several reasons. The supply of social rental housing (51%) is far greater than the unregulated sector rental supply (18%). Owner-occupied homes are also a scarce commodity in Amsterdam (31%).⁴ De Groot: “Amsterdam has a vibrant economy and wages in the capital are higher than in many other parts of the Netherlands.⁵ The Amsterdam economy is very attractive to knowledge workers from abroad (expats) who mainly rent in the unregulated sector.”

Rotterdam

In all Rotterdam districts percentage price increases were measured in the fourth quarter of 2021 compared with the previous year. In the center of the port city rents rose by 2.8 percent; new tenants paid € 18.53 per square metre per month. The average rent in the center is more than one euro higher than in the second most expensive district of Rotterdam, Hillegersberg-Schiebroek. Rents here rose by 12 percent to € 17.57 per square metre per month.

In addition to Hillegersberg-Schiebroek, percentage price increases above 10 percent were measured in another seven Rotterdam districts. For example, the square metre price in Charlois rose by 15.1 percent compared with the same period a year earlier. New tenants in this district paid € 14.67 per square metre per month for a rental property in the unregulated sector. Also in Delfshaven (+12.4%), IJsselmonde (+16.5%), Kralingen-Crooswijk (+11.7%), Nieuw Mathenesse (+11.7%), Noord (+10.6%), and Prins Alexander (17.5%) new tenants paid more than if they’d moved into their new home in the same period in 2020.

Home type

Pararius distinguishes three types of housing: apartments, single-family homes and detached houses. For each type, percentage price increases were measured in the fourth quarter of 2021. The average square metre price of apartments increased by 3.8 percent compared with last year. New tenants paid € 17.80 per square metre per month. Single-family homes rose 9.4 percent in price to a square metre price of € 13.52 per month. In the fourth quarter of 2021, 18.2 percent more was paid for a detached house than a year ago: € 16.87 per square metre per month.

Living area 

In all living area categories, percentage price increases were measured in the fourth quarter of 2021 compared with the previous year. Homes with an area between 75 and 100 square metres cost an average of € 16.93 per square metre per month, which is 5.5 percent more than the year before. Larger homes, with an area between 100 and 125 square metres, rose in price by 6.3 percent. New tenants in this category paid an average of € 14.85 per square metre per month. Homes with a living area less than 75 square metres are the most expensive per square metre, with a square metre price of € 19.80 (+4.6%).

Owner-occupied housing market impacts rental market

The average square metre price of homes in the Dutch unregulated rental sector was historically high in the fourth quarter of 2021. According to Jasper de Groot, CEO of property portal Pararius, the fact that price increases are now being observed after four quarters of percentage price decreases (Q3 2020 - Q1 2021) has to do with developments in the current housing market. “The housing market is still out of balance,” he says. “The prices of owner-occupied homes are skyrocketing, making it almost impossible for first-time buyers to enter the owner-occupied market without a (double) above-average salary. Never before have there been so few homes for sale as there are now. There are currently around 45,000 homes for sale throughout the Netherlands, of which 26,000 are already under negotiation, leaving only 19,000 available.”

According to the Land Registry, existing owner-occupied homes were 20.1 percent more expensive in November 2021 than in the same month a year earlier.⁶ The average sales price in November was slightly above € 400,000.

For 2022, ABN Amro economists expect a price increase of 12.5 percent for owner-occupied homes.⁷ Due to the limited housing supply, the number of transactions is also expected to fall by 10 percent this year. Compared with the owner-occupied market, the percentage price increase in the Dutch unregulated rental sector is not too bad.

De Groot: “Developments in the owner-occupied market have a direct effect on the rental market. Home seekers who, for whatever reason, cannot buy a home, have to rely on the rental sector. They often earn too much to claim social housing and are therefore forced to turn to the unregulated sector. But this sector is far too small to meet the high demand.” In previous rent monitors, Pararius already stated that only 7 percent of all homes in the Netherlands are in the unregulated rental sector, compared to 33 percent in the social rental sector.⁸ “The ratio is completely off. The Netherlands is the world champion in building social rental housing, but offers virtually no rental housing in the unregulated sector. There are too few options; one either buys a home or qualifies for social housing. Anyone who can't do that is trapped. When the demand is many times greater than the supply, this leads to an increase in rents. The only thing that can be done to remedy this is to increase the small share of rental housing in the unregulated sector.”

Explanation of calculations

The figures in this rental report are based on 15,393 properties that were removed from online platforms during the fourth quarter of 2021. The condition in which a property is rented (shell, upholstered or furnished) and the type of rental property greatly impact the average rent per square metre. All figures shown relate to rental properties that were offered on Dutch platforms and were removed from listings during the relevant quarter and thus became available to new tenants. Only homes where more than 30 measurements could be taken over the entire quarter were included in the calculations. Rental properties with a living area of ​​less than 60 square metres (with the exception of the specific share of rental properties in the unregulated market with a living area between 50 and 75 square metres) and larger than 300 square metres and with a rental price below €752.33 were not included in the calculations because these rental properties are allocated to the Dutch social housing sector. Rental properties which stated "price on request" were not included in the calculations. No distinction was made in the calculation between homes, apartments, detached houses, studios or rooms, unless stated otherwise.

To mitigate the influence of outliers on the average, the calculation of the average is done over the values that fall between the 2nd and 98th percentiles (inclusive, based on the entire dataset).

Average rental price per square metre per month

The average rent per square metre per month of a rental property is equal to the monthly rent divided by the living area (in m2) of the relevant property.

The surface area for all rental properties is between 50 and 300 square metres. Not one property lists its price on request. All 10 above-mentioned properties are therefore included in the calculation.

Average rent per m2 per month: (Sum of rent p/m2 - p/month) / (number of rental properties) = €164.67 / 10 = €16.47 per m2 p/month.

About Pararius

Pararius is the largest independent website for rental properties in the Netherlands. Pararius brings together tenants and landlords. Over 4,500 professional organisations advertise their available rental properties on Pararius. These organisations consist of real estate brokers, property management companies, developers and housing associations throughout the Netherlands. The website welcomes more than 2.5 million visitors every month. Visitors have free and unlimited access to the supply of over 70,000 properties. Pararius is multilingual and is also the largest expat rental platform in the Netherlands for the more than 350,000 expats working in the Netherlands.

This rental report is powered by Realstats.