Builders, municipalities and clients have been engaged in feverish consultations for months about the progress of upcoming housing projects. The construction of more than 25 thousand homes is in jeopardy, according to a study by the trade journal at the end of September Cobouw. Due to last Wednesday’s nitrogen ruling by the Council of State, hundreds more construction projects will come to a standstill, the construction sector warns.
That is a blow to Minister Hugo de Jonge of Housing and Spatial Planning. His most important assignment: build 900,000 new homes by 2030. This should dampen the derailed house prices and alleviate the housing shortage.
It is difficult to determine which projects are being shelved and why. The developers and architects with whom de Volkskrant spoke, do not want to name projects, for fear that construction partners will withdraw. It is clear from their reactions what the main obstacles to house production are.
Obstacle 1: Nitrogen Crisis
When the Council of State undermined the government’s nitrogen and nature policy three years ago, the construction exemption was devised; last Wednesday, that ‘rule’ was brushed aside by the judge. There will be no total construction freeze; The possible consequences for nitrogen emissions must now be calculated for each project. This will lead to even more delay.
Bright spot 1: more conversions
Many opportunities in housing creation remain underutilized, experts say. Existing homes can be put to better use, for example by making it easier to split houses or by no longer penalizing cohabitation with a discount on pension or benefits. More empty commercial premises could also be converted into homes, for which a nitrogen permit is probably not required. According to Statistics Netherlands, only 9,500 homes were ‘built’ from conversion last year, the lowest number in seven years.
Obstacle 2: labor shortage
The current housing crisis stems in part from the economic crisis that began in 2008 with the collapse of banks selling ‘junk mortgages’ and dragging the real estate market into their trap. Construction companies went bankrupt, almost half of the architects lost their jobs and many construction workers were retrained. The consequences are still being felt in the shortage of housing and construction personnel.
Bright spot 2: industrial building
A number of large construction companies see a possible solution in industrial construction. Delivering houses in ready-made pieces saves labor and time. However, setting up such a production line requires a substantial investment.
Obstacle 3: more expensive building material
Construction was able to continue during the corona pandemic, but due to the lockdowns in China, among other things, shortages of building materials arose. Costs also rose sharply. Due to the war in Ukraine, energy prices shot up and material prices rose further; those for steel and aluminum have doubled compared to last year. As a result, developers no longer dare to give a fixed construction price, which means that negotiations about new projects fail.
Construction contracts are currently being pushed back and forth. ‘We are now renegotiating land prices with the municipality’, says a developer. A municipal official sees stretch in the margins of a construction company. Sometimes developers ask municipalities for a reduction in the mandatory percentage of social rental housing in a project. With more owner-occupied homes they would get the project ‘finished’, says an architect. “Or so they say.”
Bright spot 3: sustainable demolition
‘This is a golden opportunity to stimulate sustainable projects’, says architect Robert Winkel, who is developing a wooden residential tower with medium-priced rental apartments in Rotterdam. Fortunately, the wood had already been purchased last year. Another possible advantage: ‘sustainable demolition’, in which materials are dismantled and sold, is becoming more and more profitable.
Obstacle 4: rising interest rates
The extremely low interest rates of recent years had to help the economy through the financial and corona crisis. As a result, and due to the decline in housing construction, the housing market quickly went haywire. Now that mortgage interest rates are rising, as are energy prices, home buyers are putting the brakes on. Some call off the planned purchase of a new-build home, for fear of not selling their current home or selling it for too low a price. This makes developers, who are also affected by the increased interest rates, wary of new projects.
Bright spot 4: countercyclical building
Now that housing associations have more financial elbow room, they can do what they had to refrain from doing during the previous crisis: building countercyclically; against the economic situation. This may also be possible at a lower cost. Thus, housing construction continues.
Obstacle 5: faltering government
The Netherlands has long been renowned for its spatial planning and social housing. Both politicians and civil servants are now grappling with the complexity of construction tasks, from housing and infrastructure to new energy supplies.
A new Environment and Planning Act should facilitate construction procedures and participation. But its implementation is being delayed. The implementation turns out to be – ironically – too complicated. A developer also complains about a shortage of officials. “They just don’t have the people to review all permit applications.”
Bright spot 5: own ministry
With the return of a Ministry of Housing and Spatial Planning, the government is taking steps towards greater unity and urgency in housing policy. In total, almost EUR 11 billion has been made available to accelerate housing construction, with an emphasis on affordable housing.