Private sector "completely locked up"; Rents rise above €20 per m2 as supply dwindles

The private sector rental market remains “completely locked up,” reported housing platform Pararius based on third-quarter figures. Due to high rents, a private sector home remains virtually unattainable for many home seekers. The organization also observed that landlords are still selling rental properties into the owner-occupied market on a large scale rather than re-renting them.

New tenants had to pay an average of €20.34 per square meter per month in the third quarter, an increase of almost 7 percent. This amounts to €1,856 per month for an average rental property. A gross income of €5,569 is required to afford such a property.

“In the previous quarter, the average rent exceeded €20 per square meter for the first time, and this barrier now appears to have been broken for good,” concluded Pararius.

Last quarter, 13,958 private rental properties became available, the organization calculated based on listings on its own platform and other sources. At the same time, 14,715 rental properties disappeared from the market, further reducing supply. Each listing received an average of 42 applications, slightly more than a year ago.

“The number of applications per property remains historically high, which again indicates that competition in the rental market remains fierce.”

Pararius also noted that private investors are rapidly disposing of their rental portfolios, partly due to higher taxes and stricter regulations.

Real estate experts have long advocated for the reversal of the Affordable Rent Act, introduced by former Housing Minister Hugo de Jonge. Although the law was intended to protect tenants, experts have long warned that it is actually counterproductive and further exacerbates the housing shortage in the private sector.

Due to stricter regulations and lower returns, more and more investors are withdrawing from the rental market. As a result, the supply of mid-market rental properties is declining, while demand is growing.