RESIDENTIAL

Keypoints

  • Investment volumes decline in the fourth quarter
  • Initial yields continue to decrease
  • Shortage of affordable rental housing drives market rental prices
  • Increase in house prices persists but is showing signs of easing

Lower quarterly volumes but year-on-year improvement in investments

Lower quarterly volumes but year-on-year improvement in investments The investment volume for Dutch rental properties slightly decreased in the fourth quarter of 2024. According to preliminary figures from RCA, the investment volume amounted to €880 million, which is 20 percent less than the same period in 2023. With a preliminary annual figure of €3.8 billion, there was indeed more activity in 2024 compared to the previous year when only €3 billion in investment transactions was recorded. However, the annual volume for 2024 remains significantly lower than the years prior to 2023 when volumes exceeded €9 billion. In addition to many transactions by investors employing a sell-off strategy, institutional investors were net the largest buyers of Dutch rental properties in 2024. The share of foreign investors remained limited, as recent fiscal reforms have made it less attractive for these parties to invest in Dutch real estate.

RESIDENTIAL INVESTMENT VOLUME BY QUARTER (€, BILLIONS)

Source: RCA (2025), edited by Achmea Real Estate

Initial yields continue to decline

The prime initial yields fell sharply in the fourth quarter by approximately 30 basis points, marking the third consecutive quarter of declining initial yields. There is increased interest in new build properties, which is contributing to a further recovery of investment values. Due to the rise in risk-free interest rates in the fourth quarter, the spread with the risk-free rate has slightly decreased (source: C&W).

PRIME YIELDS RESIDENTIAL

Source: Oxford Economics, C&W (2025), edited by Achmea Real Estate

Rental prices are rising sharply

The significant shortage of affordable rental housing continues, with the financial vacancy rate remaining low at 1.5 percent in the third quarter of 2024. As a result of the low vacancy rate, market rental prices have increased by 7.5 percent year-on-year, reaching yet another record high. Due to low new construction output and the rise in sell-off strategies, it is anticipated that market rents will continue to rise. Figures for the fourth quarter will be available later (source: MSCI). Recently published figures from Pararius, an important indicator for the private rental market, show that the tightness in the rental market persists in the fourth quarter, which is reflected in a declining supply.

BURANO - ZAANDAM

Source: Achmea Real Estate

The housing market continues to perform well

House prices increased by 2.5 percent in the fourth quarter of 2024 compared to the third quarter. Compared to a year earlier, prices rose by 11.5 percent. This is evident from figures provided by the NVM. The number of transactions rose by 19 percent compared to a year ago, marking the highest number since the fourth quarter of 2024. The supply remained stable compared to the previous quarter. Due to the combination of the increase in transactions and the stabilised supply, the tightness indicator decreased: a potential homebuyer now has an average choice of 1.8 properties, down from 2.3 last quarter.

The NVM figures are based on the average transaction price and provide a rough but current indication of house price developments. The price index for existing owner-occupied homes (PBK) from CBS and Kadaster offers a more accurate but delayed indication. The fourth quarter figures are not yet known, but based on expectations from Oxford Economics, the PBK is expected to rise by more than 2.7 percent in the fourth quarter, leading to a 12 percent increase year-on-year. The Eigen Huis market indicator, which reflects consumer confidence in the housing market, has further recovered in 2024. In October, the indicator stood at 96 points, the highest level since March 2022. In 2016, the indicator peaked at 121 points (100 is 'neutral' on a scale from 0 to 200).

INDEX OF PURCHASE AND RENTAL PRICES (2015=100)

Source: MSCI, Oxford Economics, Kadaster (2024), edited by Achmea Real Estate

Construction costs continue to rise

The construction costs for new build apartments slightly increased by approximately 1 percent in the fourth quarter of 2024. Year-on-year, the growth was around 3 percent, lower than the 4.6 percent in 2023. In particular, the prices of wood, copper, and aluminium rose in 2024. According to IGG, construction costs are expected to continue to rise over the coming quarters by approximately 4 percent year-on-year. The upward trend in the number of building permits continued in the third quarter, but remains well below the high numbers seen in 2020 and 2021. As a result, the workload for contractors is increasing slightly, leading to a rise in the tender index due to increasing margins (source: IGG).

CONSTRUCTION COSTS INDEX (2015=100)

Source: IGG (2025), edited by Achmea Real Estate

Outlook

It is expected that the investment market will perform better in 2025 than in 2023 and 2024 due to the stabilisation of risk-free interest rates and clarity regarding rental regulations. However, it seems unlikely that the high volumes from the years 2018-2020 will be reached due to the still relatively high levels of capital market interest rates. Additionally, fiscal constraints make Dutch investments less attractive for many foreign parties. Initial yields are expected to remain relatively stable compared to the sharp decline in 2024. Market rental prices are expected to continue to rise in the coming quarters, and due to the limited supply, vacancy levels will remain low. In the housing market, significant increases in house prices are again expected for 2025. Major banks anticipate that the increase will be somewhat lower than the high levels seen this year, as affordability comes into question.

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