First-time buyers on the Dutch housing market – the starters dilemma

Abstract

"First-time buyer has a chance to buy only 3 percent of owner-occupied dwellings in the Netherlands” (NOS, 2023). This quote reflects the harsh reality of single first-time buyers in the Dutch housing market. The substantial surge in housing prices has exacerbated challenges for first-time buyers since 2015 (Groot, 2022). The housing supply falls short in comparison to the demand in the Netherlands. Apart from the existing housing shortage, extended waiting periods in the social rental sector, exorbitant house prices, and the recent upswing in mortgage interest rates contribute to the scarcity of suitable options (Boelhouwer & Van Der Heijden, 2022). It appears that, mainly around the provinces comprising Randstad, the housing market is tight (Calcasa, 2023). The share of relocations from the rental market to the owner-occupied dwelling market has declined nationwide in recent years, while demand for owner-occupied dwellings has increased. Despite the government's possible attempts to address this housing shortage, for example, by building around 350,000 affordable owner-occupied or rental dwellings in the middle segment before 2030, availability and affordability remain a stumbling block for first-time buyers. By better targeting the construction of suitable "starter" dwellings, this problem can be addressed for the target group. Therefore, it is essential to consider the balance between the financial capabilities of the first-time buyers and the minimum desired living characteristics and living environment. To find the minimum desired characteristics of first-time buyers, it is important to look at their substitutional behaviour and the possible concessions they are willing to make, to meet the current housing prices.  Therefore, the aim of this research is to identify the preferences and considerations of first-time buyers in the Randstad region. It started with a literature review on the different theories behind the whole moving process, in order to then start the empirical research.The empirical research initiated with a research on the Dutch housing market with a deepening focus on the Randstad region. Then to research how the financial position of first-time buyers is affected by government regulations and other factors. After gaining an understanding through research into the supply for first-time buyers and their financial capabilities, the housing preferences and considerations of this target group were mapped out utilizing a survey conducted among 326 respondents. Following MAUT's methodology, these respondents rated possible topics (attributes) and characteristics of these topics (attribute levels) to gain insight into their preferences. This quantitative research showed that respondents mostly preferred a corner dwelling with a garden in a suburban area. Based on these findings, it can be concluded that first-time buyers highly value having a garden and a supermarket in the immediate vicinity, but also that the greatest preference, is not always the most realistic preference in view of financial capabilities.