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Market developments

Vesteda Housing Market Indicator, actual as per Q4 2020

Source: Vesteda,

Serious impact of COVID-19 on Dutch economy, housing market unaffected

It will come as no surprise that the Housing Market Indicator dropped significantly in 2020. We started the year with a steady score of 7.0 in Q1 and Q2, but the effects of the COVID-19 pandemic were clearly visible in the 3rd quarter, as the score dipped to 6.2. The swift decline in GDP growth and consumer confidence in particular had a huge impact. The HMI recovered slightly to a score of 6.7 in Q4, but these early signs of a recovery are still fragile.

Vesteda Housing Market Indicator, Q1 2018 - Q4 2020

Source: Vesteda,

The COVID-19 pandemic resulted in a global crisis and governments across the world taking various extreme measures to deal with the economic, humanitarian and social consequences. Although the exact (economic) impact on the long-term is yet unclear, the economic effects in 2020 were clearly visible and the effects will presumably reach far beyond 2020. We expect a delayed impact in the form of unemployment and bankruptcies when government aid is phased out. It is hard to determine the exact impact, which will very much depend on the duration of this crisis and the Dutch government’s support aimed at providing Dutch citizens with income security.

The impact on the Dutch housing market has been less dramatic than the impact on the economy as a whole, at least so far. House prices are still rising, albeit at a slower pace, and the transaction rate is still high. The rental market is also still in good shape, despite an increase in vacancy in the high-end rental segment. Strong demand, limited supply and low interest rates seem to be providing a strong foundation for the housing market.

We are also seeing positive developments in other HMI drivers. Tenant satisfaction increased to an all-time high of 7.1 in 2020, compared with 6.9 in 2019. Furthermore, the score on the sustainability front increased to 7.2 in Q4 from 6.9 in Q1. This improvement was primarily due to an increase in the numbers of homes with a green energy label and by a significant improvement of the GRESB score of Dutch residential non-listed real estate.