The demand for houses remains high, with increasing scarcity and rising prices as a result. Particularly in the major cities, shrinking supply is leading to a decrease in the number of houses sold. The expectation is this number will still rise by 16% in 2017 compared to 2016. The demand for new rental housing is also unprecedented. The number of transactions in this segment increased by 40% compared to the same period the previous year.
The Netherlands remains an attractive market for residential investors
Despite lower investment volumes in residential property in the first half of 2017, investors' demand for houses remains high due to the low interest rate environment. Also, interest of international parties is high due to the relatively high returns in a low-risk market. This appetite has led vacant possession value ratios (value in-use / vacant possession value) increasing to more than 100%, showing that investors are willing to take more risk and are anticipate to a further increase of prices.
Opportunities beyond Amsterdam
Initial yields declined in all cities in the first half of the year due to an increased demand. We expect a further decline to below 4% in the coming months. Investors' focus shifted from selling off property to exploitation. As a result, we expect that proper investment opportunities remain scarce. Due to pressure on the Amsterdam market and other major cities, medium-sized cities become increasingly interesting for residential property investors. There is more supply at these locations and investors can realize higher returns at slightly more risk.
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