House prices have continued to soar in Amsterdam and the city remains on the UBS list of potential real estate bubbles after debuting last year, the Swiss bank said on Friday.
Amsterdam is one of six cities listed as places where the fear of missing out is driving people to pay too much for a home. The list is headed by Hong Kong and London is in sixth place, behind the Dutch capital.
UBS says real housing prices in Holland’s largest city have soared by 45% in the last three years. ‘The bubble risk soared in Munich, Amsterdam and Hong Kong. In Vancouver, San Francisco and Frankfurt, too, imbalances continued to grow,’ the Swiss bank said.
The research shows a skilled service worker needs to work for 10 years to be able to buy a 60m2 flat near Amsterdam city centre, well below the 15 years need in London, and 14 in Paris.
UBS says that since 2013 real prices in the Dutch capital have increased by 60%. ‘Their ongoing explosive growth was fueled by the strongest income increase since 2013 among all cities and attractive financing conditions,’ UBS said.
‘The city’s housing price rise has more than doubled nationwide averages in the last five years. Given the highly strained affordability, a tightening of lending conditions might end the boom rather abruptly.’
Research last year showed that some 80% of new owner-occupier properties within the A10 ring road cost more than €400,000, while rents of €1,500 for a one-bedroom flat have become the norm.
The city council has decided that 40% of new homes built within the city’s boundaries must fall under social housing rules, meaning the rent can be no more than €710 a month.
A further 40% must target middle income households with rents of around €850 per month or be affordable to middle income home buyers. The remaining properties will target high earners.
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