Why are Dutch new-build apartments so expensive, and what happens next?
I’ve been trying to understand the Dutch housing market and something doesn’t quite make sense to me.
For example, I’m looking at a new-build apartment that will be completed around 2027. It’s only 53 m², has an A++ energy label, on the 12th floor, and is within walking distance of a train station. The total finished price is around €370,000, which works out to roughly €7,000/m².
I understand that location, energy efficiency and the fact that it is brand new add value, but €7k/m² still seems extremely high for a 53 m² one-bedroom apartment.
This makes me wonder about a few things:
1. How do developers actually arrive at these prices?
Is it mainly based on:
construction costs?
the price they paid for the land?
development/planning costs?
required profit margin?
comparable existing properties in the area?
or simply what they think buyers are willing/able to pay?
For example, if construction costs + land + permits + financing + other costs come to €300k per apartment, do they basically add a target margin and arrive at €370k? Or is the process more complicated?
2. What does this mean for existing homes in the same area?
Suppose an existing apartment nearby is 53 m² but 20–30 years old and currently worth €280k (€5,300/m²), while the new-build is €370k (€7,000/m²).
Would you expect this gap to remain?
Or does one of these prices eventually have to move toward the other?
My intuition is that there should be some kind of relationship between them. If a new-build is €7k/m², it seems difficult for an otherwise comparable existing apartment to remain at €5k/m² forever. But perhaps I’m misunderstanding how the Dutch market works.
Could we end up with very large €/m² differences between new-build and existing housing in the same neighbourhood, simply because construction costs and new-build requirements have become so expensive?
3. What happens to the Dutch housing market if small apartments are already this expensive?
This is probably the part I find most interesting.
If a 53 m² one-bedroom apartment costs €370k, you need a pretty significant income or a large amount of savings to buy it. And this is supposed to be relatively “affordable” housing compared with larger family homes.
So what happens if this continues?
Do prices eventually have to correct because younger buyers simply can’t afford them?
Or can prices remain high because:
wages continue increasing,
mortgage borrowing capacity increases,
there is still a huge housing shortage,
investors/parents provide additional capital,
and there simply aren’t enough homes being built?
I’m especially interested in what people who work in real estate development, construction, valuation or Dutch mortgages think.
What actually determines the €370k price of a 53 m² new-build apartment, and what do you think will happen to the price gap between new-build and existing homes over the next 5–10 years?