It is not shocking that the real estate market is full of twists and turns. For instance, many analysts assumed the residential property market to fall, as household income would decrease due to the economic downturn caused by the global pandemic. Yet, this could not be further from reality, as real house price growth at a worldwide level accelerated during the Covid-19 outbreak. Now that the aftereffects of the pandemic have gotten enough time to simmer, we can take a look at some of the long-term trends within the real estate market, as well as other new developments.
Specifically, in this article, we will discuss the policy created to tackle the housing problem in some significant Dutch cities and the upward trend of house prices that is currently taking place in the United Kingdom.
Dutch Purchase Protection Policy
The housing market in Rotterdam has been in disarray. People who try to buy permanent housing in Rotterdam are challenged by ‘opportunistic investors’, as they are eager to buy houses or apartments to rent out at sky-high prices. Furthermore, because rental properties are often temporarily occupied, the result is not a pleasant neighbourhood where residents know and greet each other but a neighbourhood with many changing tenants.
To tackle this problem, Rotterdam will be installing property purchase protection in sixteen different neighbourhoods, applicable to homes within the low and middle segment with a property value up to € 355,000. This means that starting from the first of January 2022, whoever buys such a house in the mentioned neighbourhoods must live in it themselves or may only rent it out under strict conditions.
It turns out that Rotterdam is not the only Dutch city in which ‘opportunistic investors’ have taken over the housing market. Amsterdam, The Hague and Utrecht are also in talks to adopt property purchase protection. Similarly to Rotterdam, Amsterdam will also adhere to the self-residential obligation regarding property valued up to € 512,000. Whereas Utrecht and The Hague will not be enforcing the self-residential obligation, advocating for a rent limit on all privately purchased properties in the city.
According to the Dutch land registry, these private investors take up 17.8% of property in the major cities across the Netherlands, which is considered a substantial amount. By implementing property purchase protection, families and students would hopefully find a home much more efficiently. At the same time, opportunistic investors need to find a different method to participate in the real estate market.
UK Housing Prices On The Rise
To everyone’s surprise, house prices in most advanced economies rebounded in 2020 despite the global pandemic. Expansionary fiscal and monetary policies turned out to be very effective in facilitating house price growth and keeping it at a very high level. Months have passed, and house prices are still growing at a rapid pace, fuelling debate about the risks of overheating in certain countries.
The United Kingdom is one of those countries where the housing market is on ‘fire’. According to data from the building society Nationwide, the average UK house price rose by 0.9% last month, after an increase of 0.7% in October, taking the average UK property value to £252,687. Furthermore, house prices rose to almost 15% above levels seen in March 2020 when the Corona pandemic struck the UK.
It is still unclear how long this upward trend is going to last. Yet, while the real estate market is still flourishing as even hard-to-sell homes are being snapped up by the hundred, it is better to take advantage of it.
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