A combination of rising house prices, increased sales of new builds, and growing order books are an indication that housing construction in the Netherlands is set to pick up this year, new analysis from ING has found.
At the same time, the industry still faces a number of bottlenecks, including a shortage of suitable land, financial constraints, and grid congestion.
New-build home sales
Between January and November 2024, sales of new-build homes rose by nearly 50% compared to the corresponding period in 2023. While this is lower than in the corresponding period from 2019 to 2022 – albeit not far off – it still reflects renewed confidence in the housing market, ING said.
“In addition, we estimate that at the end of 2024, Dutch house prices of existing homes were about 12% higher than a year earlier,” commented Maurice van Sante, senior economist, construction and team lead sectors, ING.
“Key factors contributing to this increase were the slight decline in mortgage rates and the rise in wages. As a result, consumers can borrow more and therefore offer higher prices. However, Dutch new-build prices have barely increased, making them more competitive compared to existing homes. Project developers are therefore able to raise the prices of new builds. Projects that were initially not financially viable due to high construction costs can now proceed, although financial feasibility often remains a concern.”
Dutch government targets
In December, the Dutch government reaffirmed its goal of constructing 100,000 new homes annually at the Woontop housing summit. Commitments have already been secured to develop 75,000 new homes, mainly located in the Utrecht-Nieuwegein region.
As a result of increase home sales, order books are also ‘well-filled’, according to ING, with a reported backlog of 13.9 months in October 2024, up from 12 months in January.
This increase reflects not only the recovery in housing construction but also structural factors, such as growth in renovation and sustainability projects, ongoing staff shortages, and the rising complexity of construction projects.
“Demand for new Dutch residential construction is picking up strongly,” van Sante added. “However, the supply side is once again the bottleneck due to a shortage of building land, complex project development, and legal delays. Housing projects also sometimes face electricity grid overloads, causing new construction to be postponed due to a lack of connection options”
An estimated 73,000 new homes are set to be completed this year, up from 68,000 in 2024. Read more here.
