Clear Signs of Recovery in Dutch New Housing Market by 2025
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Loading... - Eva Reilly
- 05 Jul 2024
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Higher turnover in project development, more building permits, and increasing new home sales are all signs of a recovery in the Dutch construction sector in 2025.
Expected Decline in Construction Volume in 2024
ING Research anticipates a contraction in Dutch construction output by approximately 3% in 2024, primarily due to a significant decline in the first quarter. The new construction production in 2024 will still be affected by earlier declines in permitting and new home sales in 2023. However, a recovery is expected in 2025, mainly driven by a resurgence in new home building.
Clear Signs of Upcoming Recovery
Signs of recovery are evident at the beginning of the construction value chain. Project developers' turnover is increasing, and the number of building permits issued has risen in the first months of 2024. Sales of new-build homes are also on the rise due to the improving housing market. Additionally, the production of concrete, cement, and bricks increased slightly in the first four months of 2024, following a contraction of more than 15% in 2023.
Building Permits on the Rise Again, but New Environmental Law Could Have an Impact
In May 2024, 6,753 building permits were issued for new-build homes, marking a 23% increase compared to the same month in 2023. Substantial increases were also reported by Statistics Netherlands (CBS) in February and March, which is positive for housing construction. However, the introduction of the new Environment and Planning Act (Omgevingswet) and the Quality Assurance Act (Wet Kwaliteitsborging) at the beginning of 2024 may have influenced these numbers. Builders and project developers might have rushed to submit applications before 2024 to fall under the old legislation, potentially causing a temporary spike in permit grants.
Low Growth in the Infrastructure Sector
Small positive growth is expected in the infrastructure sector for 2024 and 2025. This growth is driven by the reinforcement of the electricity grid, investments in infrastructure for new housing construction, and a minor boost from the new Dutch cabinet.
Structural Staff Shortages: The Biggest Obstacle in the Construction Industry
Despite the drop in demand, staff shortages remain the most significant obstacle for Dutch construction companies to maintain production. In June, 18% of contractors reported being mainly limited by a lack of well-trained staff. Even with declining production volumes, this remains a pressing issue. Additionally, 15% of companies in the sector indicated in June that they lacked sufficient orders to sustain their construction volume.
Few Bankruptcies
Most Dutch construction companies remain in good shape after years of high growth. While contractor bankruptcies increased in 2023, they remain historically low, and the first months of 2024 saw a slight drop in bankruptcies. Structurally, the prospects for construction after 2024 are positive, given the tight housing market and sustainability challenges. Growth in construction volumes is expected in 2025 (1.5%). However, it remains crucial for construction companies to stay future-oriented and invest in digitalization, attractiveness as an employer, and sustainability.
