There is a huge housing crisis in the Netherlands. In the major cities, finding a place to live is expensive and difficult. But, particularly for people who want to buy their first homes, the market has become a nightmare over the last five years. A combination of regulations, population growth, and economics has left the Netherlands with way less housing than it needs.
In order for the Netherlands to have enough housing for its growing population, Minister for Home Affairs Kasja Ollongren says that 845,000 homes need to be built by 2030, when she presented the 2020 report on the state of the housing market to parliament in June 2020. By 2030, the Netherlands will have about 18.8 million inhabitants, so not only does the Netherlands need to take that into account when they’re planning for the future, but they also need to build extra to make up for the current shortage.
The Dutch housing crisis: is it a big deal?
The impacts of this problem are numerous, and serious. Firstly, the most obvious: rising house prices. This means that it becomes more difficult for first-time buyers to enter the market- and if they do manage to buy a home, they risk negative equity if housing prices drop again.
The housing shortage also impacts social housing: while working-class families tend to be taken care of, single individuals have a hard time getting housed. Furthermore, homelessness is on the rise in the Netherlands, particularly among young people.
While the problem is nationwide, the major Randstad cities are particularly under pressure, with Amsterdam, of course, leading the way. Utrecht, The Hague, Rotterdam and Groningen are also struggling to house their inhabitants affordably.
Housing shortage in the Netherlands: the nitrogen crisis & a lack of building permits
Ah, our favourite topic, the stikstofcrisis, or nitrogen crisis. But what does the housing crisis have to do with the nitrogen crisis? Well, the Netherlands has been struggling with too many nitrates for years now, but in 2019 it all came to a head. Farmers and their tractors were out on the streets, but so were construction workers, at least a couple of times.
The reason behind the construction workers’ protests were new nitrogen regulations- the PFAS standard- imposed by the government to deal with the untenably high levels being emitted. The problem with these regulations, though, was that they made building slow to a standstill: not a good thing when the country desperately needs new houses.
Following the protests, these regulations were rolled back in December. However, it still takes two years from the granting of a permit to a house being ready to live in, so we are likely to be dealing with the effects of these regulations into 2021.
Housing shortage in the Netherlands: lack of free space
The Netherlands is small, I think we can all agree on this. It also makes very economical use of its land, being the second biggest exporter of produce in the world, just after the US. Agricultural space takes up 53 percent of the Netherlands. Add in the occasional nature reserve (also under threat because of the nitrogen crisis, by the way) and you’re not left with very much space at all.
That means that building permits are naturally hard to come by. It is vital to protect nature reserves, even as the housing crisis takes hold. Not only do they provide sanctuary for wildlife that has otherwise been evicted from this highly urbanised country, but they also provide value to people as places to relax and exercise. There’s no point in building new houses in a country that isn’t liveable otherwise.
Who is behind the Dutch housing crisis? Partly investors
The Netherlands has failed to deal with property investors. A study commissioned by the ministry, and carried out by the Land Registry and the University of Amsterdam, showed that in areas where investors were buying more than 20 per cent of the properties that came on the market, they were able to manipulate the market so that they paid less per property than first time buyers or ordinary people moving house.
These areas include what you would expect: Amsterdam, Groningen, The Hague, Utrecht, Rotterdam and Eindhoven. But, the Cabinet announced that it would not be taking any measures to deal with this back in October.
Another culprit of the Dutch housing crisis: Airbnbs and tourism
In many cities across the world, the rising popularity of Airbnb has caused housing shortages where there were none before, and worsened already existing shortages. The easy money available from tourists persuaded many to convert properties into Airbnbs: but that left the locals short on places to, well, live.
In the Netherlands, and particularly in Amsterdam, which suffers from over-tourism as a rule, Airbnbs have created a real problem for local people in search of a place to live. So far, the Dutch government has only proposed a “registration requirement” for homeowners who want to rent their houses out to tourists. The four largest cities of the country, Amsterdam, Rotterdam, The Hague and Utrecht, were all unhappy with the unambitious nature of this law.
Housing crisis in the Netherlands: the shortage of construction workers
There is also a shortage of construction workers in the Netherlands and, let’s face it, you can’t really build houses without them. Research by ABN AMRO showed that the shortage of construction workers was even making construction companies say no to projects that they otherwise would happily have taken on. The bank’s study showed that about one-fifth of contraction companies have needed to refuse an order as a result of staff shortages. Even if firms don’t have to do this, their building speed slows: and the Netherlands needs houses fast.
Tighter lending regulations don’t make the Dutch housing shortage any better
There are also some tighter lending regulations at play. These don’t necessarily mean that fewer houses are built, but what they do mean is that unless the housing crisis is resolved by building new houses, potential buyers are in a much worse position.
Dutch banks are only allowed to lend buyers the value of the house they buy as a mortgage, which is sensible. The problem with that, though, is the extra costs that are incurred when you buy a house. For first-time buyers on a middle-sized income between 30,000 and 40,000 euros per year, those are big costs to incur. That means that people in this income bracket need to save for a long time before buying a house, so they’re left renting for longer than is ideal.
The population is increasing, which means the Dutch housing shortage is getting worse
The population in the Netherlands is increasing, so more housing is necessary. There are two reasons for this: natural population growth (though in the Netherlands, this is fairly low) and immigration.
The Netherlands has become home to lots of international students and expats over the past decade. Both tend to congregate around the Randstad, but even in Tilburg and Wageningen, both decidedly not in the Randstad, students have needed to camp out because the housing shortage was so bad in these cities.
So how do we deal with the housing shortage in the Netherlands? 8 possibilities
1Solution to the housing shortage in the Netherlands: building more houses
The Facebook commenters are likely already screaming “jUst BuILd mORe HoUsEs”, but it’s nowhere near that simple.
Crises don’t tend to result when there are simple answers to the problem at hand. For one thing, the government doesn’t build houses itself, and the national government, whom many would turn to in this hour of need, in particular, has no power.
Municipalities give out the permits to developers to build new houses: but Dutch municipalities have never been the most efficient organisations to exist. In short, part of the solution does lie in building more houses. But there is more to the problem than that.
2Solution to the housing shortage in the Netherlands: centralising control
Given the number of control municipalities currently have (and their ineffectiveness in dealing with the housing crisis), part of the solution could be transferring some of that power to the central government. There has been talk of this in the lower house of the government, with the CDA being particularly in favour of it, RTLZ reports.
3Solution to the housing shortage in the Netherlands: more affordable types of houses should be built
The housing crisis could also be ameliorated by changing the types of houses being built. First-time buyers are having a hard time getting on the property ladder: houses are too expensive, and the wrong size.
The average price of a new-build is 388,000 euros, RTLZ reports, which is way too expensive for working and middle-class people, particularly those wanting to buy a house for the first time.
4Solution to the housing shortage in the Netherlands: build more family homes and also smaller apartments
Most people want to buy a house, rather than an apartment, and also want a place with a small garden. That is not, however, what is most often being built. Apartments are most commonly constructed, because they are cheap and don’t take up as much space as these terraced houses.
On the other side of the debate, there is also the fact that a lot of apartments are also not small enough: as more and more people choose to live alone, smaller apartments are becoming more desirable.
5Solution to the housing shortage in the Netherlands: building tiny houses (and offices)
Although far a solution that supports the status quo, another solution to the Netherlands’ housing crisis might be tiny homes. An emerging phenomenon in the western world, the concept originated in the US, where many people have enormous homes filled with stuff. Minimalists and those in search of a simpler way of life were attracted to the concept of tiny homes: which have now made their way to the Netherlands.
We interviewed some tiny home inhabitants, so if you want to know what life is like in a house the size of a garden shed, then we’ve got you (as usual). Tiny offices have also started to emerge onto the scene.
6Solution to the housing shortage in the Netherlands: cannabis concrete?
Dutch innovation rarely lets us down, and that’s true of the housing crisis, as well. A company called Dun Agro constructed the first prefab house made from hemp back in September 2019. Given the current number of hemp farms in the Netherlands, the building company believes it could be possible to construct up to 500 of these hemp-houses each year. That wouldn’t solve the housing crisis, but every little helps (and who doesn’t want to tell their scandalised family back home that they live in a house made of cannabis concrete?).
7Solution to the housing shortage in the Netherlands: get rid of those dang chickens
Other proposed solutions have included major changes to the Dutch agricultural model, by halving the number of livestock, as D66 proposed last year, for example. Apart from the sheer amount of space they take up, commercially farmed animals produce a lot of nitrogen. By halving the number of animals, D66 hoped to allow more building to take place as a result of the drop in nitrogen output. But the plan was almost universally denounced, and was followed by months of protest by farmers.
8Solution to the housing crisis in the Netherlands: tax relief for first-time buyers
And, finally, there are tax measures that could be taken to make it easier for people to buy for the first time, even if that in itself would not add to the amount of housing on the market, RTLZ reports. Currently, there is a 2 per cent transfer tax on each sale, which the new owners have to pay. The government considered removing this last year before Prinsjesdag, but decided against it: perhaps incorrectly.
What has your experience of the Dutch housing market been? Let us know in the comments below.
Feature Image: djedj/Pixabay.