Amsterdam’s housing crisis

There is no denying that the housing crisis in this country has taken on new urgency, with more and more people struggling and often failing to obtain a home suited to their wishes. Especially for first-time buyers, inexperienced in the housing market and unable to provide what privileged sellers want to see, chances are decreasing by the day. Compromising on the presennce of a garden or the number of bedrooms is no longer enough. One might wonder what is causing this crisis to last for so long and how we are eventually going to get out of it. Surprisingly, it seems that a large part of what’s keeping this vicious circle in tact is our own competitive streak.

Amsterdam, as one of Europe’s most picturesque and inviting cities, continues to attract new potential homeowners daily. In terms of real estate, the location has become no less than a warzone. Not only local people hope to settle by the canals of their trusted city, but a growing number of investors is attempting to take advantage of the housing shortage by either re-selling or renting their property. Due to the shortage of houses on offer and the relatively small city’s increased desirability, bluntly said, there simply isn’t enough to fulfil all wishes.

With the situation being majorly favourable to the seller, buyers feel driven into a corner. If they cannot meet the standards required, the only option often seems to raise their offers. The result is skyrocketing prices, as outbidding has become the norm. Refusing to outbid simply means you have no chance. Taking a look at the statistics, according to Het Parool newspaper, in 2021 82% of Amsterdam’s homes were sold above the asking price.

Furthermore, Het Parool states that between July and September 2021, on average 10,8% more than the asking price was paid. However, an exact number is difficult to pinpoint since this average refers to all transactions; therefore, the true number is probably even higher.

Perhaps these figures aren’t as unexpected as one might think, with houses all over the country being sold in a similar fashion. Mortgage interest rates are lower than ever before, providing buyers with more wiggle room to engage in bidding wars. Not only houses in the centre of Amsterdam and other urban areas are greatly sought after, but even rural areas are seeing the influence of this crisis. Due to the corona crisis, more families are seeing the benefits of moving to rural areas and the space they offer. In fear that more will do the same in the time to come, houses are selling at an increasing speed and higher price.

It is unknown when the numbers will start to drop, as researchers had earlier predicted this course of events to be unsustainable and likely to have changed already. Housing market experts suggest several potential solutions. Most important is increasing the benefits of renting a home, thus reducing the gap between existing homeowners and people just entering the market. With rent prices rising steeply as well, especially in cities, currently the more lucrative option remains to buy a home. Especially with the prospect of selling the property for far more than having bought it for, the long-term advantages outweigh those of renting by far. Therefore, anyone with the financial means to attempt buying a house is quickly convinced. For homeowners who choose to sell their home in today’s market, the benefits are obvious. Once on the property ladder, making these higher offers becomes less of a hindrance.

Initiatives to enforce change start with the government changing policies; however, it is hard to turn back time. Simply giving new buyers an advantage will not undermine the financial benefits for existing buyers. Creating a fair playing field is more challenging now that the ratio between buying and renting has already become disproportionate. Finally, breaking the cycle from within is also close to impossible. For hopeful buyers, being a pioneer for change becomes less advantageous if it means being left behind without a place to live.

Written by Charlotte Seijger