‘South Amsterdam: popular, but low supplies and too expensive’
While last year, this report asked the question ‘affordable or unaffordable?’, we can now carefully begin to conclude that the huge price increases in South Amsterdam are starting to level off, and the number of homes sold is decreasing sharply.
Whereas the price per square meter rose with 24%-27% last year, this year the increase is dropping sharply, to 7%-8% per m2. In practice, we are observing responses from potential buyers during viewings that signify that they are no longer prepared to bid higher than the asking price. They are also increasingly choosing not to register above the asking price. ‘Enough is enough’, the new motto seems to be. Buyers seem to be taking a step back, choosing a different borough or trying to find an alternative outside of the city.
Another major problem of the current market, a possible standstill because of the supply running dry, is still looming. The remarkably low number of homes up for sale in South Amsterdam is currently 2,225, whereas this was 278 exactly one year ago. Considering the fact that the borough consists of 80,000 houses, of which around 29% are privately owned, the percentage of houses on sale is 1%. This is a historically low number. In 2016, we sold 2,250 homes in the borough. This number is similar to the level of 2014 and 2015. The current statistics show that the number of transactions will fall sharply. Since 1,300 houses have been sold in the first three quarters of 2017, we should be happy to reach a total number of 1,750 sold homes in 2017.
This means South Amsterdam may have arrived at the next ‘crisis’. The Makelaarsvereniging Amsterdam (MVA) has repeatedly issued warnings about the low percentage of homeownership in the city. The statistics in the South of the city clearly show that housing need and demand is very high, while the supply of properties up for sale has sunk to its lowest level yet.
Today’s house hunters have decided not to throw old shoes away before they can buy nicer, better ones. This has created a double spiral. Homeowners have abandoned their motto ‘sell before you buy’. Banks are slowly starting to provide financing again to bridge the gap. The necessity to sell before buying has therefore faded. Because of this, the number of house hunters on the market has almost doubled, and the number of homes up for sale is quickly declining. Those 225 homes for sale in South Amsterdam at the start of the fourth quarter of 2017 are not nearly enough to satisfy the (high) demand. Right now, buyers are anxiously looking for alternatives. It is not unusual for new building projects to raise the interest of over 2,000 parties. The Zuidas has evolved into an attractive living environment, where the production of houses can’t keep up with the constantly persistent demand. Developers need time to restart projects that were put on hold during the crisis. The Municipality of Amsterdam, in addition, needs to complete long procedures before being able to start developing new sites. There is pressing need for houses, but now the construction needs to be stepped up.
The trend of fewer transactions (2,400 to 1,750) and a supply that has fallen from 1,655 to 225 in three years’ time, is a historical low. We can conclude that the motor has stalled. My prediction is that we will sell less homes in the coming years because the market is not used to this ‘inverted’ crisis.
The seller doubts whether he can improve his living environment in the city, postpones his decision, and chooses for a new kitchen or a newly built nursery room. The buyer often finds himself viewing a (small) house with multiple candidates standing beside him, and is therefore forced to compete on the price. Signals show that the average buyer is fed up with this and will choose for an alternative (leaving the city). Whereas the seller benefits from a real ‘seller’s market’, the question is how long this situation will continue, if the buyer decides to leave that very market.
With a listing time of 22 days, South Amsterdam is topping the list of boroughs. Many buyers claim that the South has become the most expensive borough, but that image has been clouded by the sale of more expensive single-family homes. In the most common type of apartments (built before 1945), with a median selling price of €473,000, the South is still below the City-centre borough, with a median of €511,800. With a total median transaction price of €544,900, the city-centre is still the most expensive borough of Amsterdam. In the higher segment, most of the demand is for a bigger apartment of over 150 square meters, with an elevator and pleasant surroundings. Unfortunately, we can’t provide everyone in South Amsterdam with this type of home. The consumer will therefore have to adapt his (housing) wishes to the current trends.
Don’t be surprised if the prices in 2018 will only increase ever so slightly, and the supply in South Amsterdam will decline even further. This will shut down the market completely. The South is and will continue to be a very popular borough, and considering the current circumstances no longer attainable for many Amsterdammers. The majority of opportunities lie outside of the Ring, where houses are sometimes 50% cheaper than in South Amsterdam.
MVA estate agent Pieter Joep van den Brink, Carla van den Brink Makelaars
South Amsterdam is a borough of the Municipality of Amsterdam with a surface area of 17.41 km2. The borough, formulated in 2010 after a merging of the earlier boroughs Oud-Zuid and Zuideramstel, is bordered by the Singelgracht, the Northern border of the Vondelpark, the Westlandgracht, the Amstel and the Kalfjeslaan. Its population was 141,438 in 2015.