Amsterdam hits housing snag: Construction falls short of target
Despite starting construction on over 5,000 homes in 2023, Amsterdam fell short of its ambitious goal of 7,500 new units, highlighting ongoing challenges in addressing the city's chronic housing shortage. "These are tough times for housing construction, and we notice that," admitted Housing Construction Alderman Reinier van Dantzig. "But compared to previous crisis years, we're doing well thanks to hard work by all parties."
While exceeding an initial forecast, the shortfall underscores the difficulties posed by rising inflation, higher construction costs, and lower yields for developers, the city said in a statement. These factors, combined with uncertainties surrounding rental market legislation and high interest rates, have made investors cautious, especially in the mid-priced rental segment, where construction lagged behind expectations.
Progress has been made in social housing, with construction starting on 2,809 units, but concerns remain. The construction of mid-priced rental units, crucial for young professionals and middle-income families, fell short of expectations. Builders started work on 314 new rental homes in the middle segment, with monthly rental rates between 808.06 and 1,175.72 euros. Construction also started on 731 expensive rental homes.
The city said construction started on about 1,300 owner-occupied homes. Of these, 45 were intended to have a price tag below 355,000 euros.
Furthermore, Van Dantzig warned that the upcoming year "will also be a difficult year for housing construction." The city needs tens of thousands of new housing units by 2030, while the Netherlands as a whole was grappling with a shortage of about 390,000 homes in mid-2022.
To tackle this, the country wanted to stimulate the construction of 100,000 units per year, but fell well short of that total last year. About 73,000 homes were built last year, and 75,000 the year before.
Despite the setback, Amsterdam's political leadership remains determined to "vigorously" increase construction. Van Dantzig announced the extension of several measures aimed at stimulating development, including a scheme to moderate price indexation into 2024, a program offering a 10% discount on land prices for projects transforming existing properties into housing, and the possibility of reducing land prices for other projects that haven't yet begun construction.
"The municipality is dependent on market parties, private individuals and housing associations for the construction of homes. In-depth consultations were held with investors in the city about stimulating housing construction," resulting in an agreement last year where parties agreed to use their influence to urgently address the Amsterdam housing crisis.
