The new building comes to a standstill due to a toxic cocktail of multiple causes, which reinforce each other. On Tuesday, ABN Amro released a report showing that the housing market has come under further pressure. Five questions about the construction of new homes.
At the moment there is already a shortage of 390,000 homes, while the number of building permits will also fall sharply. This while the ambition of housing minister Hugo de Jonge was precisely to build 100,000 houses per year.
What is the cause of the decline in new construction?
According to the sector association WoningbouwersNL, the loss of consumer confidence is the main cause. “People do not dare to buy a house now, because it will take another year before the house is completed. They therefore prefer to buy an existing home,” says Coen van Rooyen of WoningbouwersNL.
In addition, the number of residents in the Netherlands is rising sharply, which is putting even more pressure on the housing market. Construction economist Maurice van Sante of ING states in a report that consumers search less for ‘new construction’ on the internet in the first half of 2023. Half fewer new homes were sold than in the same period last year.
What effect will rising interest rates have?
Due to the higher interest rates, consumers can borrow less and it is becoming more difficult for investors to pay for new construction costs. The housing minister blames the stagnation of new construction on rising interest rates. But at the same time, other interventions by Minister De Jonge in the housing market also lead to less new construction, such as maximizing rents.
“Self-flagellation”, Van Rooyen calls this. “Because there is structurally less rental income, large investors can no longer make the investment. This makes them shy, even though they are necessary for major investments.” As a result, even less gets off the ground, especially projects in inner cities.
But De Jonge wants to build there, right?
That’s right. Almost all of De Jonge’s one million homes are planned within city limits, often in places where something already stands and near stations. According to the Economic Institute of Construction, it will certainly take years before construction can actually take place at these locations, because companies must first be bought out and the soil must be cleaned up. In addition, these types of projects cannot be ‘cut up’ into several pieces, as is possible, for example, in a new housing estate with houses with gardens.
Where should it be built?
It is now up to the new provincial governments to do this. They have to solve ‘puzzles’, in which housing has to compete with, for example, the energy transition and nature. Bouwend Nederland already sounded the alarm last week by stating that the housing issue seems to have been forgotten. The EIB has a different solution, namely the so-called ‘street side’ in every village or city in the Netherlands. This can be done relatively quickly and there is no need to build a road, train or metro first.
When will things kick in?
That is partly up to the State. Construction is also hampered by the nitrogen problem. Initially there was an exemption for the construction phase, but that was canceled more than half a year ago. Although emissions from construction are negligible, this is an additional complication when issuing permits. “We are missing places where we can drive piles into the ground tomorrow, partly due to a shortage of civil servants, the nitrogen rules and all kinds of additional local requirements for housing,” says Van Rooyen.