Starting in 2021, more than 35,000 affordable newly-built rental homes can be achieved
1 februari 2021
Young people and senior citizens will experience more difficulty on the housing market.
The pressure on the Dutch housing market remains unprecedentedly high. The current housing shortage totals nearly 300,000 homes. This is slightly lower than was previously expected. This can be attributed to the growth in population being cut in half in 2020 due to the pandemic and the number of households that increased by only 50,000 instead of the average of 64,000. Despite this decrease, the housing shortage remains historically high. For young people and senior citizens in particular the situation is dire. Too few homes have been built in recent years for these growing target groups. However, opportunities do exist. Dutch and foreign investors and housing associations have a record amount of capital available. If more cooperation can be created and building permit procedures can be accelerated, then together they can build more than 35,000 affordable rental homes annually. The number of permits can also be increased to a minimum of 80,000. This is necessary to prevent the shortage from rising even further to 355,000 in 2023. This is evident from the annual study by Capital Value in cooperation with ABF Research into developments in the residential (investment) market.
Population growth decreases by nearly half, number of households continues to grow
Due to the corona pandemic, the rate at which the Dutch population is growing has been dropping sharply since March. The preliminary estimates for 2020 show an increase of 67,000 residents. During the period 2017-2020, the number of inhabitants rose by between 100,000 and 125,000 annually. The development in the number of households is primarily important for the housing market. This increased sharply by an average of 64,000 annually between 2010 and 2019. In 2020, the increase was approx. 50,000. Based on two different scenarios, the number of households is expected to rise by 341,000 to 414,000 between 2020-2025. The number of singles will rise by 9% to 3,472,000 in 2025. It is primarily households that are 55 and older that will increase over the next five years, and mainly in the oldest age groups.
Housing shortage continues to rise, though at a slower rate
Initial estimates of the housing shortage show a shortage of approx. 285,000 in 2021 (3.6%). Current forecasts regarding population and household growth indicate that the housing shortage is estimated increase to approx. 355,000 homes in 2023 (4.4%). A real decrease is not expected until 2027, because home construction takes an average of 22 months and 36 months for large projects.. In addition, in 2019 and 2020, fewer building permits were granted than were needed. The greatest shortages can be found in large cities such as Delft and Westland (8.3%), Amsterdam (7.5%), Utrecht (5.4%), Arnhem/Nijmegen (5.6%), and Flevoland (5.3%).
Number of building permits remains inadequate
According to the most recent forecasts, approx. 62,000 building permits were issued in 2020. Although this exceeds the number of permits issued in 2019 (58,000), this number is still inadequate to effectively address the housing shortage. In research by Capital Value, 75% of developers and 59% of housing associations have indicated that it is the granting of permits particularly and the lengthy procedures that are preventing the realisation of new-build plans. According to Capital Value, it should be possible to issue a minimum of 80,000 permits per year starting in 2021. This is more than the current Cabinet's policy of 75,000 permits. The amended regulations regarding nitrogen pollution emissions (nitrogen reduction act) will also significantly reduce the restrictions for issuing building permits. However, substantial work should be done to expand the planned stock. The established planned housing stock for the next five years is insufficient to effectively address the housing shortage. It should be the new Cabinet's ambition to expand this to a minimum of 400,000 homes.
Sound the alarm bell for homes for the elderly and young people
Of the total growth in households, 61% will be due to households in the age group 75-84 years. Up until 2030, 310,000 of these households will be added, of which 178,000 will be single households. In the period up until 2030, an increase of 40% is expected in the number of 75 and older households with mild to severe mobility difficulties. Too little has been built in recent years for this group especially. This applies to 98,000 of these types of households over the next five years.
The number of young households that will not be able to find a suitable home will also increase further in the coming years. In several regions where there is pressure on the market, considerable numbers of newly-built homes are required for this growing target group. For this group, affordable and mid-market rental homes and affordable owner-occupied homes are especially needed. Approx. 268,000 young households currently reside in suboptimal living arrangements. In recent years, the percentage of children still living with their parents has risen sharply. In 2009, 22.4% of 18-39 year-olds still lived with their parents, and in 2020, this number rose to 27.2%. It is obvious that if the housing market is expanded, more (older) young people will attempt to enter the housing market and find their own home. A large percentage is anxiously waiting for an affordable home, which is an important condition for their further (social) development. According to Capital Value, the realisation of suitable housing for senior citizens and young people should be a key point for market parties and the government, and that policy should not only extend to the quantity of homes but also to the quality of homes.
92% of housing associations want to invest
Housing associations invested approx. 1.8 billion euros in new rental homes in 2020. According to estimates by Statistics Netherlands, this totals approx. 10,000 homes in 2020. It was previously agreed that housing associations would build 25,000 homes per year. The realisation of new-build output has remained well behind ambitions. In the study, 74% of housing associations have indicated that this is due to insufficient land positions. Fifty-nine percent (59%) have indicated that this is due to the slow granting of permits. Only 15% of respondents indicated to have insufficient funds for the realisation of new-build output. A total of 92% of housing associations indicated a willingness to invest more in affordable rental homes. An additional 52% want to invest more in mid-market rental homes, which is a considerable rise from previous years. Another positive sign is that 74% want to invest more in homes for senior citizens and light care homes, and 25% in intensive care homes.
Pension funds can realise 10,000 affordable rental homes annually
For years, Dutch pension funds have played an important role in the realisation of more affordable rental homes in the Netherlands. They have indicated an ability to invest approx. 3 billion euros annually in the new-build output of rental homes for 2021 and 2022. For these investors, it is important that no further restrictive regulations emerge, and that targets are made to accelerate permit procedures.
Foreign investors want more new-build output, too
In 2020, foreign investors invested approx. 3.7 billion euros in Dutch rental homes, 22% of which were in new-build output (3,600 rental homes). They have indicated a willingness to invest more than 5 billion euros on an annual basis, and an increasingly larger group is looking into new-build output for the coming years. Ninety-three percent (93%) have indicated a willingness to invest in mid-market rental homes and 63% have indicated they would also invest in affordable social rental housing. Notably, 50% of foreign investment funds show a willingness to invest in student accommodation. In doing so, they are complementary to Dutch investors. Capital from foreign pension funds is primarily used. In 2020, the most prominent investors originated from the US, Germany, Scandinavia, Belgium, and Singapore.
Marijn Snijders, Director Capital Value, "There has never been so much capital available for the construction of affordable rental homes. We have the greatest construction challenge ahead of us since the Second World War. It would be a missed opportunity if we did not use the available capital from housing associations and pension funds. All focus should be on speeding up permit procedures and incentivising the construction of affordable rental and owner-occupied homes. We can only make up for the shortage with improved cooperation and the acceleration of processes. It is essential that more be built for the elderly and young people. Due to the pressure on the housing market, there is also a risk that construction costs will rise even further. The new Cabinet will have to look into stimulus measures. The recently imposed measures, such as the subsidy for those entering the housing market and additional regulation of the rental market, are not sufficient"
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