Housing Crisis Threatens in 2024 Due to Shortage of Land and Rising Costs

Next year is expected to be challenging for the Dutch housing sector, according to a recent statement by Minister of Housing, De Jonge. The threat is caused by a combination of factors, including a shortage of building land, elevated interest rates and rising construction costs, all of which hamper the government’s goal of adding 900,000 more homes by 2030.

Despite the addition of more than 90,000 new homes last year, a number in line with current government targets, expectations for next year are unlikely to meet this rate. “The situation remains uncertain, but we can expect a significant dip in construction in 2024,” warns De Jonge.

The Economic Institute for Construction predicts a decrease in housing production of 3.5 percent in 2023 and another 5.5 percent in 2024 compared to previous years. Moreover, the Neprom, the organization of project developers, expects that the production of new homes may be halved.

The decline in construction has been attributed to several factors. High interest rates mean that home seekers can borrow less, while inflation pushes up the cost of building materials. At the same time, slow land acquisition and the issuing of building permits hamper the construction of affordable housing.

Meanwhile, the demand for housing is growing. In 2022, the Dutch population will have grown by 227,000 people, mainly due to migration – an increase twice as large as in 2021. This trend is expected to lead to a revision of the number of houses to be built in the coming years.

To tackle the construction crisis, De Jonge calls on provinces and municipalities to look for alternative construction locations. He has announced ‘acceleration talks’ and has made an extra half a billion euros available to stimulate the construction of additional homes despite the challenging circumstances.

In addition, De Jonge is working on the Regie op de Volkshuisvesting Act, which should halve the time it takes to realize a new home – currently an average of ten years from planning to completion. This law is currently in the consultation phase, where stakeholders can express their views.