Several factors cause headwinds in housing construction. The higher interest rate, the nitrogen problem and sustainability requirements are bothering builders, writes ABN AMRO in a report on the construction sector. This while the cabinet wants 900,000 houses built to address the housing shortage.
ABN AMRO has seen the number of permits issued for new build homes drop by 11% in one year.
The bank’s sector economists are positive about continued strong demand for new homes. As a result, builders don’t have to worry about buyers staying away. It is becoming increasingly difficult in the more expensive segment, says ABN AMRO.
Rising interest rates mean that more expensive new build homes are no longer as easy to finance. That makes promoters of such a construction project more hesitant, the bank expects. Additionally, material costs have increased rapidly in more than a year. These cost increases of more than 12% have been ongoing since the start of the war in Ukraine in February.
Builders continue to struggle with new requirements for new construction projects, such as having heat pumps and solar panels. Furthermore, the electricity grid is not always able to handle extra connections and there are also staff shortages which make the electricity grid not easily expandable.
Nitrogen dossier delays construction projects
ABN AMRO also sees headwinds in the nitrogen dossier. In early November, the State Council abolished the nitrogen exemption for construction, as a result of which all new construction projects must submit calculations on nitrogen emissions during and after construction.
As a result, many delays are expected in construction projects, because all these calculations also need to be evaluated and approved.
