Netherlands' increased Defense spending putting further pressure on housing construction

The Netherlands’ additional investment in the Armed Forces will put further pressure on housing construction, ABN Amro warns. The construction industry is already facing staff shortages, and Defense expansion will compete with housing construction for the available staff, AD reports.

The Dutch government has earmarked billions in extra funds for Defense in the coming years for expansion. This includes building more barracks, training grounds, and other military infrastructure.

That will require the same contractors, engineers, and installers that are also needed for housing construction, infrastructure maintenance, and the expansion of the electricity grid, ABN Amro economist Adrian Collien told AD. “17,000 to 19,000 extra workers are needed annually until 2030 for all construction tasks,” Collien said.

Because that personnel is not available, the Ministry of Defense’s construction plans will put even more pressure on the “already tight construction labor market.” Successive governments have set the goal of building 100,000 homes per year to battle the Netherlands’ major housing shortage. That target has never been reached, partly due to staff issues in the construction sector.

The extra demand from defense could also drive up prices, especially now that the Iran war is driving up the prices of raw materials and energy.

“There will be a personnel battle,” Collien said. “In addition, we still see a lack of construction sites, and construction power is also a growing challenge due to shortages on the electricity grid.”

Bouwend Nederland, the trade association for the construction industry, also sees trouble looming. “In addition to the housing shortage, the backlog of infrastructure maintenance, and the expansion of the power grid, another major challenge is on the horizon for the construction and infrastructure sector: contributing to the defense target,” Chairman Arno Visser told AD. "And this while 60,000 people in the construction and infrastructure industry are retiring in the coming years and need to be replaced."