Fewer construction permits issued in NL as middle-class struggle to find homes

In the second quarter of this year, 12.8 thousand permits were issued to build new homes - the lowest number in three years and 14 percent less than in the second quarter of 2018, Statistics Netherlands reported on Thursday. The permitted building sum for the new construction and renovations of homes was also nearly 15 percent less than the second quarter of last year.

The number of permits issued for new homes is an early indicator of the number of homes that will be built in the near future, according to the stats office. With a housing shortage facing the Netherlands, the Dutch government wants to build 75 thousand homes per year, as agreed in the Housing Agenda. With only 26 thousand construction permits for housing issued in the first two quarters of this year, according to Statistics Netherlands, it is not clear whether that target can be reached.

With the housing shortage pushing up rents and house prices, it is increasingly difficult for people in the Netherlands to find affordable homes - especially for people with mid-level incomes who want to live in areas like cities where the housing market is particularly tight, Minister Kasja Ollongren of Home Affairs recently said in answer to questions posed by PvdA MP Henk Nijboer. "The chances of people with a middle income to find a suitable home must be improved. That is why homes must be built and these homes must end up with middle-income households", she said.

The Minister already announced a number of measures to promote the construction of middle class homes and to make sure they end up with families with mid-level incomes. For example, she took unnecessary steps out of the process for corporations to build non-SGEI homes in order to accelerate the building process. And she made it possible for municipalities to allocate housing to specific income levels in the event of scarcity.

According to Statistics Netherlands, the total construction costs of housing permits issued in the second quarter amounted to 3.8 billion euros. That is nearly 15 percent lower than in the second quarter of 2018.

But while fewer construction permits are being issued, construction companies are still doing well. Construction revenue in the second quarter was 7.9 percent higher than a year earlier. Companies in civil and utility construction performed significantly better in the second quarter, seeing a turnover increase of 10.9 percent compared to a year earlier.

Companies in civil engineering, hydraulic engineering and road construction saw their turnover decrease by 0.7 percent. This may have to do with a recent ruling by the Council of State, that declared the Dutch nitrogen policy invalid. According to the ruling, companies can only build if they have a nitrogen plan and if it can be proven that nature reserves in the area will not be affected, according to NU.nl.

This ruling resulted in at least 43 percent of all road projects in the Netherlands being uncertain, together accounting for 9 billion euros in revenue, ABN Amro economists said in a report released this week, according to NU.nl. In the housing construction sector, builders will miss out on at least 1 billion euros a year up to and including 2023, because housing projects are put at risk through the Council of State ruling.