Increasingly difficult to build new homes: ABN Amro

The construction of new homes is becoming increasingly difficult due to unfavorable market conditions, ABN Amro wrote in a report on the construction sector. According to the bank, rising interest rates, higher sustainability and quality requirements, and difficult permits due to the nitrogen issue are causing headwinds. ABN Amro concludes that “delivering energy-efficient and affordable new construction is a tough task.”

According to the bank, the problems put more pressure on the Cabinet’s ambitions to build 900,000 houses by the end of 2030 in order to combat the housing shortage. ABN Amro said that rising interest rates lead to higher financial costs, making clients more hesitant, which puts the brakes on high-risk projects. The rise in interest rates also means less demand for the relatively expensive newly-built homes. Home buyers have a lower borrowing capacity, which reduces demand for newly constructed projects.

In addition, the material costs for builders remain high, and the package of requirements for new construction is increasing due to the nitrogen problem. Solar panels and heat pumps more often have to be installed in new buildings. The issues with energy infrastructure also play a role. The electricity grid is at its maximum capacity in various places, so new homes and businesses can only be connected if the grid is expanded at the same time. But material and personal shortages make these investments more difficult.

ABN Amro added that there are some bright spots. The demand for housing remains structurally significant. The energy transition and the renovation of existing buildings also entail a stream of orders for construction companies.