Rents in the Netherlands have risen further

Market share of unregulated sector housing too small to meet demand

Pararius quarterly rental report Q1 2022

The square metre price of rental homes in the Netherlands rose by an average of 6.7 percent in the first quarter of 2022 compared with a year ago, according to figures from property portal Pararius. New tenants paid 5.4 percent more for a shell (not furnished nor upholstered) rental, 9.1 percent more for an upholstered rental home and 6.1 percent more for a furnished rental home.

Pararius distinguishes three delivery forms: shell, upholstered and furnished. A price increase was visible in the Netherlands for all delivery forms. Furnished rental homes rose on average by 6.1 percent in the first quarter of 2022. New tenants paid € 19.82 per square metre per month. This delivery form is the most expensive per square metre. Upholstered homes experienced a price increase of 9.1 percent. The square metre price here came to € 16.69 per month. New tenants paid 5.4 percent more for shell homes compared to the first quarter of 2021. The square metre price for this type of home was € 14.31 per month.

Housing type

Pararius distinguishes three types of housing: apartments, single-family houses and detached houses. Prices of newly available rental homes in the unregulated sector in the Netherlands rose in the first quarter of 2022 in all categories.

An average of € 18.14 per square metre per month was paid in the Netherlands for an apartment. That is 6.9 percent more than a year ago. Single-family homes rose 8.7 percent in price: new tenants paid € 13.57 per square metre per month. The percentage increase was largest among detached houses that were deregistered from Pararius in the first quarter of 2022. A detached house cost 16 percent more than a year ago, which comes down to a square metre price of € 16.36.

Provinces

The Netherlands has 12 provinces. At the provincial level, rents for housing in the unregulated sector rose almost everywhere. Only in the province of Groningen did the average square metre price remain the same as last year; new tenants here still paid € 15.31 per square metre per month.

In the other northern provinces – Drenthe, Flevoland, Friesland and Overijssel, - price increases fluctuated. In Drenthe, new tenants paid 1.4 percent more than a year ago; € 10.96 per square metre per month. This makes Drenthe the cheapest province in the Netherlands this quarter. In Friesland, where rents of unregulated sector rental homes used to be the lowest, the average square metre price rose by 10.2 percent in the first quarter of 2022 and new tenants paid € 11.17 per square metre per month.

In Flevoland the average square metre price increased by 12.5 percent compared with last year, making a rental property in the unregulated sector cost € 15.61 per square metre. This puts Flevoland in fourth place in terms of the most expensive Dutch provinces, after South Holland, Utrecht and North Holland.

Rents in the Randstad provinces also rose compared with a year ago. In South Holland, new tenants paid € 16.73 per square metre per month, 6.6 percent more than last year. Utrecht is the second most expensive Dutch province; rents here rose by 4.5 percent to an average of € 17.77 per square metre. Together with Noord-Holland, where new tenants paid € 21.75 (+8.1%) per square metre per month, the prices in Utrecht are above the national average.

In the southern provinces of Zeeland (€ 12.72) and Limburg (€ 12.71), rents rose by 2.8 and 3.1 percent respectively. In North Brabant, new tenants paid € 14.99 per square metre per month for a unregulated sector rental home (+7.8%).

The G5: the five largest cities 

In all five largest cities in the Netherlands, also known as the G5, rents for homes in the unregulated sector rose. This concerns rental properties in Amsterdam, The Hague, Eindhoven, Rotterdam and Utrecht. The price of newly available unregulated sector rental homes in Amsterdam rose by an average of 8.6 percent. New tenants paid € 24.29 per square metre per month.

After Amsterdam, Utrecht is the most expensive G5 city to rent a home. New tenants paid € 19.55 per square metre per month (+4.7%). Utrecht is not the second most expensive city in the Netherlands: a rental home costs slightly more in the medium-sized cities of Amstelveen (€ 20.45), Haarlem (€ 19.93) and Leiden (€ 19.90).

On average, The Hague and Rotterdam had the same rent per square metre in the first quarter of 2022. New tenants paid € 17.10 per square metre per month. In The Hague, rents rose by 4.6 percent compared with a year ago, while in Rotterdam the percentage price increase was 4.7 percent. Both cities are, however, below the Dutch national average of € 17.18.

Eindhoven has the lowest square metre price of the G5 cities. New tenants paid an average of 11.7 percent more than they did a year ago; € 16.90 per square metre per month.

Mid-sized cities

The fact that rent increases continue unabated in the Netherlands is particularly apparent at the level of medium-sized cities. Percentage price decreases were measured in only five of the 70 medium-sized cities that Pararius includes in its calculations. This concerns unregulated sector rental homes in Diemen (-5.6%), Heemstede (-4.3%), Venlo (-3.6%), Weert (-2%) and Zoetermeer (-5.5%). In nearly five times as many cities, twenty-four to be exact, unregulated sector rental prices rose by more than ten percent compared to last year. This was the case, for example, in Alkmaar (10.5%), Amstelveen (13%), Deventer (17.9%), Hilversum (11.8%), Lelystad (17.8%) and Nijmegen (12.7%).

Jasper de Groot, CEO of Pararius, isn’t surprised about the increasing rents in Dutch medium-sized cities. “More and more people are leaving the big city for less densely populated areas, partly because of scarce supply and rising house prices.” In 2020 and 2021, net migration to large cities was negative and the demand for housing in - easily accessible - mid-sized cities is increasing.⁴ Obviously this has consequences for Dutch house prices.

Amsterdam city districts 

Rents in Amsterdam are much higher than the national average. This applies at both city and district level. The highest square metre price was measured in the first quarter of 2022 in Amsterdam West, where new tenants paid € 26.42 per square metre per month (+7.2%).  Amsterdam Center (+8%) and South (+8.6%) follow with a square metre price of € 26.23 and € 25.42 respectively. Only in Amsterdam Southeast is the square metre price still below twenty euros: new tenants in this district paid € 19.18 per square metre per month, an increase of 8.7 percent.

De Groot emphasises that the vast majority of new rental properties in the capital are rented out furnished or unfurnished. “Of all homes that were deregistered from Pararius in Amsterdam in the past quarter, 9 percent were shells, the rest were furnished or unfurnished. These delivery forms are higher in price per square metre.” Furnished and unfurnished rental properties are mainly rented out to expats, a tenant group that is common in Amsterdam. More and more new-build homes are now rented unfurnished or furnished.

Living area

Percentage price increases were measured in all living area segments in the first quarter of 2022. The largest price increase was seen in homes between 100-125 square metres. New tenants paid on average 11.3 percent more than a year ago (€ 14.20). Slightly smaller homes, with a living area between 75-100 square metres, rose in price by 7.9 percent. New tenants in homes this size paid an average of € 16.21 per square metre per month. Homes with a living space under 75 square metres are the most expensive to rent per square metre, with a square metre price of € 20.72 (+5.6%).

Dutch housing market stuck 

The Dutch housing market is overheated. Home seekers – especially people with a middle income - find it difficult to find a home in the owner-occupied market. It is expected that owner-occupied homes will rise in price by about 17 percent this year compared with last year.⁵ With a double average income, the Dutch can borrow about 415 thousand euros, while the average price of an owner-occupied home is currently around 430 thousand euros. 

De Groot: “Many people who are now looking for a home in the Netherlands are very limited in their options. Buying an owner-occupied home is difficult, people earn too much to lay claim to social housing and are therefore forced to turn to a much too small unregulated sector rental market. In short: the housing market is stuck.” De Groot does not support all facets of the government's approach to tackling the overheated housing market. According to him, their approach focuses too much on preserving the social housing sector, at the expense of the unregulated sector. This sector remains far too small and symptom-reducing measures discourage investors from investing in this sector.

De Groot: “The Netherlands is already world champion in offering social rental housing to its population. In percentage terms, no other European country has as many social rental homes as the Netherlands. More than 33 percent of the total Dutch housing stock is in social housing, compared with only 7 percent in the unregulated sector.”

Construction slowing down as well  

The current situation in Ukraine also has consequences for the Dutch housing market. Building new homes is one of the solutions for this tight market, but the realisation of new homes is currently not self-evident for several reasons. A report by ABN Amro on the construction- and real estate sector shows that sharply rising construction costs as a result of the war could put a brake on new housing construction.⁶ Import prices of iron and steel have already risen by 70 percent in 2021 and it is expected that the rising energy prices after the Russian invasion of Ukraine will lead to even higher prices.

De Groot: “Investors are afraid to do business with developers in this current situation, because they are afraid that developers will not be able to deliver what they are currently offering in the future. This slows down construction production.”

Explanation of calculations

The figures in this rent monitor are based on 26,827 homes that were removed in the first quarter of 2022 after being offered for rent online. The condition in which a home is rented out (shell, semi-furnished or furnished) and the type of rental home (apartment, single-family home, detached house) have a major influence on the average rent per square metre.

All figures shown relate to rental properties that were offered in the Netherlands and that were removed in the relevant quarter, thus becoming available to new tenants. Only places where more than 30 measurements could be taken over the entire quarter were included in the calculations. Not included in the calculations were properties with a living area of less than 40 square metres or more than 300 square metres, or with a rent below €763.47 (liberalisation threshold from 1 January 2022 at 146 points). Rental properties offered with 'price on request' were also not taken into account in the calculations. In the calculation, no distinction was made between houses, apartments, detached houses, studios or rooms, unless stated otherwise.

Average rent per square metre per month

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

The average rent per square metre is based on a harmonic mean of the rent per square metre of all homes over which the average is calculated.

To mitigate the impact of outliers on the mean, the calculation of means is done over the values that fall between the 2nd and 98th percentiles (inclusive, calculated over full dataset).

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.