More construction projects stall as costs continue to rise, including new housing
Despite the Netherlands’ desperate need for more homes, an increasing number of construction projects are stalling or getting scrapped due to rising costs. Last year, the costs of building homes, offices, and infrastructure rose by 3.2 percent, AD reports based on figures from engineering and consultancy firm Arcadis.
“Although there is a great need for new construction and renovation in the Netherlands, many projects are still pending,” Ted Peek of Arcadis told AD. “Especially due to the exorbitant price increases in the past three years, construction costs have risen so high that the affordability of new construction, renovation, and transformation is under pressure.”
Costs will continue to rise this year, partly due to higher wage costs resulting in fewer freelancers working in the sector. The Tax Authority has started enforcing rules against fake self-employment. That means more permanent employees, with the associated pension and social assistance contributions.
As a result of the rising costs, developers and construction companies have to take more risks and put their profit margins under pressure to get projects off the ground. “And many ongoing projects become more expensive during the work. If that cannot be settled, then the risk lies with the contractor,” Peek said.
“More and more projects are on hold. In 2024, residential construction lagged behind.”
According to Arcadis, the total construction production decreased by 3 percent last year, with housing construction shrinking by 5 percent and commercial building construction by 11 percent. The construction of infrastructure fell by 1.5 percent compared to 2023. In all categories, there has been a decline in construction output since 2020.
