The housing shortage in the Netherlands increased to 315,000 homes at the beginning of 2020, which is 4% of the housing stock. Due to the decline in the number of building permits issued in 2019, and the unanticipated high increase in the number of residents and households, the housing shortage can rise to 360,000, and possibly even 380,000, in 2022. Action is needed to address the rising shortage and exploit the current opportunities that are now within reach. Builders and developers have initiatives ready for 100,000 homes annually for which a building permit is possible. Sufficient capital is available to realise these projects. Investors have indicated that 26 billion euros is available for affordable new rental homes over the next three years. Housing associations have also indicated that they can invest more and want to realise approximately 30,000 new homes in 2020. These results and more are evident in Capital Value's annual survey, produced in conjunction with ABF Research, that is being presented today at The Railway Museum, in Utrecht, the Netherlands.
Shortage may increase to 360,000 - 380,000 homes in 2022
In 2019, 77,000 new homes were completed. This number is higher than what was realised in previous years and meets the objectives of this Cabinet. Still, the housing shortage rose even more to 315,000 homes (4% of inventory) at the beginning of 2020. The number of residents increased by 132,000, and the number of households by 90,000 in 2019. As a result of this rapid growth and the limited number of building permits that were issued in 2019 (approximately 55,000), the housing shortage is expected to increase further to 360,000 in the coming years, and may possibly even rise to 380,000 in 2022.
Sufficient initiatives in the short term to apply for 100,000 building permits
The stock under development increased between the autumn of 2018 and the autumn of 2019 and provides, in its totality, enough capacity for approximately 800,000 homes over the next decade. Around 55% of these plans can be realised in the next five years. According to a market analysis of existing initiatives performed by Capital Value, it should be possible to acquire building permission for approximately 100,000 residential rental properties annually. However, the conditions required to achieve this are that the nitrogen pollution issue is addressed and procedures are accelerated. Sixty-nine percent of developers have indicated that it takes too long before building permission is granted. Especially in the major cities, greater steps can be taken in 2020.
Marijn Snijders, Director Capital Value
: "In order to increase the number of building permits granted, more capacity is required in municipalities, as well as in other places, to make zoning procedures faster, but also for support in legal matters. Some good examples are the flying brigades in a number of provinces and the way in which the metropolitan area of Amsterdam is attempting to speed up its processes. More funds from provincial governments or the national government should be made available to improve these processes and expand capacity."
Progression on the housing market is stagnant due to a lack of senior accommodation and affordable owner-occupied properties
Progression on the housing market has currently ceased because seniors can hardly find suitable housing, or cannot find any at all. From now until 2030 alone, 346,000 households in the age bracket 74 – 84 will be added to the population. Approximately 83,000 of these seniors will require an adapted home due to mobility limitations. Seniors have indicated that they would like to move, but are unable to because there is no appropriate supply available. This applies to around 20% of households aged 65-plus.
Housing associations and investors are increasingly willing to invest in healthcare and senior accommodation.
A record amount of 1.25 billion euros was invested in healthcare and senior homes, as well as in healthcare real estate, in 2019. Healthcare real estate investors have a minimum of 3.4 billion euros available for investment in healthcare real estate over the next three years. Housing associations want to invest more in this sector, which will allow this market and the number of suitable senior homes to grow in the next few years.
There is also a lack of suitable supply for those entering the owner-occupied market. In the next five years, an additional 114,000 new owner-occupied properties must be built for this target market. To ensure these properties are within reach for this target group, the government could once again offer subsidies for the segment of the population with a borrowing capacity of up to 250,000 euros.
Housing associations invest in sustainability but are not building enough
Housing associations invested heavily in the sustainability of the social rental stock despite the increasing tax burden. In 2022, it is expected that half of social rental properties that are owned by housing associations will have a minimum of a ecolabel B. The number of newly-built homes, however, remains far behind ambitions. Housing associations built approximately 19,500 new homes in 2019, even though this should have been 26,000. Production over the course of 2020 remains unclear because only 10,000 building permits were issued to housing associations in 2019, even though the ambition is to produce more than 30,000 new social rental homes. Seventy percent of housing associations have indicated that they are not able to realise new-build output because there are insufficient land positions available, and 32% have indicated that there is not enough cooperation for the granting of permission.
The good news is that only 7% of housing associations surveyed have insufficient financial means for new-build output. This percentage was considerably higher in previous years. It is important that housing associations build an additional 133,000 new social rental properties in order to house low and median income households and to improve flow on the housing market. Developers can also contribute considering that approximately 20% of the job portfolio for 2020 consists of social rental properties. Additionally, 61% of foreign pension funds have indicated that they want to invest in social rental properties.
Mid-market rentals only 6% of the housing stock
The Dutch housing market consists of 7.8 million properties and only 6% of the market is at the mid-market rental level. This percentage is much too low considering current market demand for residential rental properties in this price range. The shortage is estimated to be at a minimum of 35,000 homes. Kees van Harten, Director Capital Value, "It is important that many more additional mid-market rental homes are built in the coming years. In many municipalities, agreements are being made with investors. The danger lies in the possibility that these agreements are too non-committal in nature so that the planned objectives are not achieved. The current decentralised governmental policy for the housing market has created a situation which lacks firm central government direction. The national government should, on the one hand, facilitate local governments better in demand-driven construction. On the other hand, it should also take mandatory action if local ambitions are not realised within a reasonable timeframe. Recent developments with regard to the Valkenburg airstrip are a good example of this."
Increasing role of international investors in reducing the housing shortage
Interest from international investors in Dutch residential rental properties continues to increase. In 2019, they invested a total of 4.2 billion euros in residential rental properties, or 46% of the total transaction volume. In 2018, that percentage was only 35%. Approximately 90% of the international transaction volume involved pension fund capital. Marijn Snijders, Director Capital Value, "Increasingly more international investors are prepared to invest in new-build homes. This is important because together with Dutch institutional investors, they can contribute to reducing the housing shortage. They are able to purchase larger projects than Dutch investors. They also bring knowledge from other housing markets or for specific targets groups, such as for students or seniors. We expect that more new-build projects will be sold to foreign pension funds in 2020."