According to a recent survey, Amsterdam has one of the most expensive housing markets in the world. The study determined the value of housing assets in 25 major cities, and the Dutch capital is considered to be at high risk of highs.
Amsterdam set as “bubble risk”
It’s no secret that buying a home in Amsterdam is expensive. The Global Real Estate Bubble Index by Swiss investment banking and financial services firm UBS has determined that Amsterdam is at high risk of serious highs. The study analyzed home prices in 25 major cities to determine the value of the home market. Amsterdam was ranked as “bubble risk” and the bubble was “substantial and persistent mispricing of assets”.
The mid-2020 to mid-2021 study ranked the value of the urban housing market by comparing home price valuations with factors such as income, rent, and GDP. A weighted average of each city was calculated and the cities could be grouped into 5 categories. It is a depressed, undervalued, fairly valued, overvalued, bubble risk.
In total, nine cities were ranked in the “Bubble Risk” category. Amsterdam was at the lowest rank of these other cities, including big cities such as Hong Kong and Toronto. The city of Frankfurt, Germany, has been determined to be at the highest risk of experiencing a housing market bubble.
Rising prices in the Dutch capital
According to a survey, home prices in Amsterdam have skyrocketed over the years, supported by a stable economy, affordable funding options and high buy-to-let demand. Price increases slowed in 2019 and 2020 as affordable prices fell and mortgage lending standards became more stringent. Supply increased significantly during this period, just as the coronavirus caused a significant decline in demand.
However, home prices in Amsterdam are currently on the rise, 5% higher than they were a year ago. This is primarily due to relaxed lending standards and tax cuts for first-time owners.
World Real Estate Bubble Index: Top 10
House prices rose 6% overall from mid-2020 to mid-2021, adjusted for inflation, according to the survey. House prices did not rise during the period in only four cities (Milan, Paris, New York and San Francisco).
Nevertheless, Paris is still ranked at high risk of causing a price bubble. The top 10 cities with the highest prices are ranked below. (Tokyo’s weighted average is less than 1.50, so it is not included in the “Bubble Risk” category).
- Frankfurt – 2,16
- Toronto – 2,02
- Hong Kong – 1,90
- Munich – 1,84
- Zurich – 1,83
- Vancouver – 1,66
- Stockholm – 1,62
- Paris – 1,59
- Amsterdam – 1,58
- Tokyo – 1,46
A complete report, including detailed methodology, can be found on the UBS website.
Amsterdam’s housing market is ranked as one of the highest in the world
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