Due to the PFAS and nitrogen problems, fewer will be built this year than in 2019, ABN AMRO predicts Tuesday. The bank sees construction production fall by 2 percent and expects growth to stabilize by 2021.
The shrinkage in the new year does not stem from a lack of demand, but from a limited supply. This has everything to do with the effects of the PFAS and nitrogen problems, says ABN AMRO. As a result, considerably fewer building permits were issued in the second half of 2019. For example, the number of permits issued for new-build homes fell by 28.3 percent between August and October 2019 compared to the same period last year.
On average, there is about six months between granting a permit and the first scoop in the soil, which means that construction production will be lower next year as a result of the fall in the number of permits issued.
ABN AMRO expects the impact in 2020 to be particularly large for housing (-2.5 percent) and civil engineering, road and hydraulic engineering (-3.5 percent). A slight recovery is expected in these sectors in 2021.
Because less is being built, related sectors are also affected. For example, producers of wood and building materials will face a 3 percent drop in production in 2020 and production will fall further in 2021, predicts ABN AMRO. For lessors of construction equipment, a shrinkage of 2 percent is expected in 2020, because fewer machines will simply be used if fewer are being built.
Potentially strong growth in construction production in 2021
ABN AMRO cannot say how long the problems in the construction sector will persist and, according to the bank, will depend on new government measures. “Because there is still a demand for construction projects, many projects will be started as soon as this is possible again.”
“This can cause a bubble in the order book: few or no projects now, but later a reservoir. This can ensure that construction production grows sharply after 2021 and will catch up”, writes Madeline Buijs, economist at ABN AMRO.
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