Amsterdam taking more measures to stimulate housing construction as projects stall
The city of Amsterdam is taking extra measures to stimulate housing construction. The construction market is struggling, and, as a result, fewer homes are being built than needed to solve the housing crisis. Among other things, the city will reexamine land prices in transformation contracts to see if it can lower them for developers.
Amsterdam hoped to build 7,500 homes this year. So far, it is well behind target with 2,355 homes constructed, including 1,576 social rental homes and 211 mid-market rentals. “It currently looks like the total number will be around 4,500 homes at the end of the year,” the city said in a press release.
The construction sector is struggling under deteriorating market conditions like rising construction costs, high interest rates, and uncertainty about the national government’s plans to regulate mid-market rents. “It is currently really difficult for developers to finance projects,” alderman Reinier van Dantzig (Housing and Urban Development) said. “At the same time, the housing shortage is one of the most important concerns for Amsterdam residents and a home is very important for their social security.”
In recent months, the city has already taken measures to help project developers complete their planned homes in the deteriorating market. For example, it limited the land price indexation to 5 percent per year and extended its temporary financial arrangement, the transformation impulse.
It also carefully examined plans to distribute housing types so that projects remain financially feasible. For example, in the plans for the NDSM site in Noord, private sector homes were changed to medium-priced rentals, and in Amsterdam Zuidoost, part of the social housing and medium-priced rentals were changed into private sector homes. In that way, the city maintained a fair distribution of different types of housing while developers could fund cheaper homes with more expensive ones.
On top of that, the municipality is looking at the transformation projects again to see if it can lower land prices as a temporary crisis measure. The city is also talking to market parties to see whether other system adjustments could help, such as an alternative indexation of land prices that is more in line with the market conditions than the current way of basing it on inflation. The city is also making use of the national government’s “start building impulse” scheme, which offers additional financial support to construction projects in danger of delays or collapse.
“The suffering of the home seeker sometimes seems abstract but is very concrete, especially among young people. We want to do what we can for them to further stimulate construction in these difficult times. Because every home counts,” Van Dantzig said.