ING expects more newly built homes and a recovery in construction production in 2025

The supply of new homes in the Netherlands will likely pick up this year, although a shortage of building land, for example, will continue to hamper home construction. This is what economists from ING expect in a new report. The experts also believe that construction production as a whole will show recovery in 2025 after a brief dip last year.

The bank is expecting around 73,000 newly built homes in 2025, which is up from 2024 when 68,000 were built. “Many signals are on green in the housing construction sector,” said the economists. “Higher salaries and slightly lower interest rates have ensured that people can borrow more money to buy a house. Sales of newly built homes are increasing, which can be seen in the number of orders that home builders companies have, which has risen to record highs. "Turnover among project developers is also growing significantly again."

However, the specialists at ING also added that further growth in housing construction will be moderate as the supply will only increase slightly due to “structural bottlenecks.”

With this, they are alluding to the shortage of building ground but also to the financial capabilities, complex lengthy project developments, and legality issues that cause delays.

Another factor playing a part is power grid issues. The grid is being overloaded, resulting in new neighborhoods not being able to connect to the electricity network.

ING is predicting a 1.5 percent increase in construction production as a whole this year. Last year, there was a decline of around 3 percent, which was the first decline in the construction sector since 2013.

The bank thinks that the recovery will be mainly due to the construction of new homes. The financial company is predicting that investments in commercial buildings will be put under pressure. "Due to the faltering economic growth, many companies have excess capacity. In addition, the uncertain geopolitical situation is causing entrepreneurs to postpone investments in new business premises."

Many construction companies were able to improve their financial results last year despite the shrinkage in construction production and increasing cost of wages, ING sees.

This is said to be because they were able to increase sales prices to a limited extent, and materials became marginally cheaper. The economists believe that profits in the construction sector can improve further this year.