Is Dutch property worth investing in? Investors need to consider many factors when buying real estate, including real estate leasing. Obviously you want to protect your assets and get a good return on investment. Rental income and profit are aspects you must measure.
The Netherlands is a beautiful country with a stable economy, a high standard of living and a prosperous industry, not to mention the benefits of tourism! This is a good place to consider investing in real estate, so let's take a look at some numbers.
The current real estate market in the Netherlands
After nearly 15 years of real estate boom, the Dutch real estate market weakened in 2008. Due to the financial crisis, this situation also appeared in many other markets around the world, and the real recovery began in 2014. Real estate prices are now soaring, and tight supply and demand gaps put many first-time buyers in a precarious position. Despite increasing demand, not enough properties have been built yet. Statistics in March 2018 showed that there were only 5,986 housing permits, a decrease of 19.8% from the previous year.
Real estate prices have risen in almost every region of the Netherlands. The price of existing houses in Amsterdam increased by 12.6% in the first quarter of 2018 and by 7.2% in the previous quarter. Nationwide, the average house price in the first quarter of 2018 rose by about 8.2%, after rising by 4.1% in the previous quarter.
Interestingly, despite soaring demand and housing shortages, mortgage interest rates in the Netherlands are still very low. The average mortgage interest rate in the first quarter of 2018 was approximately 2.39%, lower than last year's 2.41%. In terms of new housing loans, the one-year IRF (Floating Rate and Fixed Rate) interest rate in March 2018 was 1.94%, compared with 1.97% in the same period last year. The IRF data for one to five years was 2.16% in March 2018, lower than last year's 2.19%. The IRF in March 2018 was 2.35% for 5 to 10 years, slightly higher than the 2.34% in 2017. For more than 10 years, the IRF was 2.89% in March 2018, compared to 2.88% in the same period last year.
Dutch property free market rate of return
The total rental yield varies from city to city. For example, in Amsterdam, the rental yield of apartments is between 3.7% and 5.3%. In The Hague, the yield is about 5.6% to 6.4%. In general, The Hague is a cheaper area to buy, with great potential, is the seat of the government, as well as the headquarters of most foreign embassies and international companies. This also means that foreign tenants have greater potential, not to mention tourism, about 1.2 million tourists come to this place every year.
Is buying property in the Netherlands a good investment?
Whether or not this is a good investment for you, it will boil down to a series of individual factors. If you meet the criteria for buying a property in the Netherlands and have sufficient cash savings, this is definitely a good investment for you. It is expected that real estate prices and rental costs will continue to rise in the future, so if you choose to buy now, you should see a good return on investment and profit margins.