While the housing shortage is still sky high, a new crisis threatens construction. Too few new homes have been built and now the corona crisis may lead to yet another setback.
Construction has barely recovered from the nitrogen and PFAS problems before a new problem arises. Although construction workers are still going to work, the sector is fearing another blow due to the corona crisis.
The third construction crisis in twelve years is likely to arise, says the Economic Institute for Construction (EIB). In the worst scenario of the EIB, it will lose 40,000 full-time jobs and construction output will drop by more than 15 percent.
But then the institute assumes an economic contraction of 5 percent. The Centraal Planbureau (CPB) previously predicted that the Dutch economy could shrink by 5 percent if public life stopped for six months.
The main issue for construction is that investments are not made during a recession. In the aforementioned scenario, investments in both the construction of residential and non-residential construction would decrease by more than 20 percent. The effect of the problems surrounding nitrogen and PFAS are also included.
Prospects for residential construction are not very promising
This while the prospects for housing are not too bright. To solve the housing shortage, the government wants 75,000 new-build homes to be added annually. However, the number of permits issued is expected to decrease. Last year, permits for 57,000 homes were granted and this year, permits for 48,000 homes are expected. On average it takes two years before these houses are built.
It is true that recovery is expected before 2021 (permits for 65,000 homes). However, the number of homes being completed is expected to drop to 50,000. According to the EIB, the number of permits may pick up again, but the supply of new homes will only increase gradually. This is because it takes time to deliver the house.
‘An important group of consumers postpones decision’
“You have to see it this way, there are two groups of consumers on the market,” says EIB director Taco van Hoek. “One group that has an urgent desire to change a living situation. That has a certain necessary character. These are, for example, people who want to live together or people who are going to divorce. They will also continue during the crisis.”
“But there is also an important group of residential consumers who have a decent home in themselves, but who think the time is ripe for an improvement. These are the consumers – we also know from previous crises – who are postponing their decision.”
He advocates timely government intervention. For example, the government can buy or guarantee homes. Van Hoek also notes that especially starters are affected. And when starters don’t buy, people who already own a home can’t sell their home. For example, he mentions less strict loan standards for starters as an incentive measure. “If those starters don’t come, it will be locked.”
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