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The outlook for 2021

Our view: possible long-term impact on housing market

COVID-19 has had a major impact on both the economy and many aspects of people’s lives. This section of our annual report glances ahead to the potential long-term effects of COVID-19. And although, looking even a few years ahead is challenging in the current situation, this is still helpful when planning for the future. For instance, some changes might be here to stay, while others could disappear over time as the impact of the virus declines. However, certain things are clear: COVID-19 appears to be more than ‘a ripple in time’ according to multiple sources, and the affordability of homes has only become more important.

Potential changes identified

The following figure provides an overview of possible changes in the demands of our (future) tenants in the short or long-term. Obviously, these changes are mainly related to the sharp increase in the number of people working from home and the fact that shops, museums, schools and other facilities were temporarily closed. As a result, people started to use and appreciate their home and their living environment differently.

Main subjects of change due to COVID-19

Source: Vesteda

The switch to working from home full-time created a steep rise in the use of remote working tools, which affects the Tech and Work quadrant in the figure above. The Mobility quadrant was affected by the fact that people travelled to work or meetings less, and were flexible in terms of working hours. With regards to the Health quadrant, a comfortable, spacious home and a healthy environment became more important. Most changes in the figure are directly or indirectly related to housing needs and wishes. We potentially see changes in the demand for:

  • Location: driven by changes in when and where people can work, make use of daily amenities and/or leisure activities.

  • Product: driven by changes in how much time people spend in their home and working from home.

Willingness to work from home after COVID-19 (%)

Source: Motivaction, Vesteda


Affordability continues to be an important topic in public debate and has perhaps become even more important in the light of COVID-19. For instance, despite the economic downturn and growing uncertainty, house prices continued to rise in 2020 and there is little sign that house prices will decline in 2021. The growing imbalance in the current housing stock, which is in turn affecting the affordability of homes, is not confined to the Netherlands, but is a global issue that is unlikely to be solved on the short-term.

The affordability problem has three parts. First, the housing expense ratio (the percentage of a household’s gross monthly income devoted to housing expenses) for free market rental housing is relatively high. Secondly, the affordability problem is affecting people who do not (yet) live in a free market rental home but are looking for one. Their options are limited. Thirdly, affordability is a particularly local problem. In our view, affordability is not a nationwide issue, but a local issue due to the scarcity in attractive regions.

Source: IVBN/Calcasa Transactiemonitor, Statistics Netherlands, edited by Vesteda

Vesteda and affordability

We recognise that finding an affordable home is an increasing problem for middle-income households, especially for starters looking for a home in the most economically attractive and dense cities. Unemployment due to the economic downturn triggered by the COVID-19 outbreak has made this problem even more urgent. Affordability will continue to be a matter of concern and will remain in the (political) spotlight, especially in 2021, when there will be a national election in the Netherlands. There is a great deal of public and political pressure to implement regulatory measures. We believe the only way to resolve these shortages is to build more homes of good quality.

Furthermore, Vesteda wants to help middle-income households to find homes by allocating part of our portfolio and future acquisitions to this target group. We consider it our social responsibility to continue to provide high-quality and affordable housing. We expect the regulated mid-rental segment to become a growing asset class. Regulated rents are significantly lower than market rents, but this segment still offers opportunities. The regulated mid-market seems to match Vesteda’s investment profile: lower risk at attractive returns. Most importantly, it fits our target group: affordable homes for middle-income tenants. The figure below provides an indicative insight into the size of our units compared with the rental price.

Living area versus monthly rent in Vesteda portfolio (indicative)

Source: Vesteda