Circulation also stagnates on the rental market

After the owner-occupier market, the market for rental homes in the non-regulated sector is coming under increasing pressure. After years of increase, the number of rental transactions has declined for the second consecutive quarter. Because the supply is less and rents are rising, according to a report by NVM and VGM NL. NVM national chairman Onno Hoes is rightly concerned about the stagnant flow. The number of transactions in the third quarter of this year declined by almost 4% in the privately owned rental housing. Compared to the third quarter of last year, there was a price increase of almost 6% in residential properties and 4.5% in apartments. New tenants are paying an average rent of €10.65 per square meter for the residential properties and of €15.06 per square meter for the apartments.

I have written about the frightening price increases in owner-occupied housing here before. I could then add that the affordability of owner-occupied homes remains good thanks to low interest rates and – for those who move on and already own a home – due to the increase in the value of their own home. This is different in the market for free-sector rental housing. Tenants cannot reap these benefits and, in addition to rising rents, will soon also have to contend with sharply rising energy prices. It is also to be feared that stagnation in new construction will further tighten the supply.

In addition, more and more municipalities are introducing compulsory owner-occupancy for buyers of homes in new construction projects to prevent private investors from buying up homes and then renting them out. At first glance this seems like a noble goal, but the consequence is that the supply of rental housing will be further reduced. That tightening in turn leads to further price increases. This is another good example of government overregulation backfiring and actually distorting the market rather than improving it. I have written this in the direction of the government before as well: stop strong regulation and instead stimulate investment in housing, both in the owner-occupied and rental sectors, both in the cheaper and pricier segments. Strive for a well-functioning housing market with freedom of choice for consumers and as few barriers as possible of any kind. This offers more opportunities for everyone.