Do more to tackle housing shortage, European Commission tells Netherlands

The Netherlands needs to do more to tackle its housing shortage, the European Commission said in its annual advice to member states. There are too many obstacles holding back investments in housing constructions, and the Dutch government is far from reaching its targets, the Commission said.

Minister Hugo de Jonge of Housing and Spatial Planning wants to build 900,000 extra homes by the end of 2030. But he is facing some significant headwinds. High construction costs and rising interest rates are frightening off investors and buyers. It is becoming increasingly challenging for developers to get plans financed, and as a result, housing construction plans get no further than the drawing board.

“The private rental market is relatively small, which results in a limited supply of affordable and available alternatives to buying a house,” the European Commission said. The market may soon get even smaller as new taxes, and the regulation of some private rentals frighten landlords into selling their properties. The lack of affordable rentals also “undermines labor mobility,” a bad thing when the Netherlands faces significant staff shortages in many sectors.

The European Commission urged the Dutch government to remove obstacles holding back investments in housing construction. Doing so could help the government reach its targets to increase the housing supply. It could also “contribute to external rebalancing as well as the better functioning of the housing market,” the Commission said.

Brussels also pushed the government to reduce household debt, specifically mortgage debt. The mortgage debt in the Netherlands is high compared to other European countries. “This makes households vulnerable to economic shocks, which is especially relevant now that risks of house price corrections have increased,” the European Commission said.