Despite the enormous housing shortage, the production of new-build homes is faltering. Developers are increasingly delaying projects or even pulling the plug on a job altogether.
That concludes the industry association of developers WoningBouwersNL in a new half-yearly report. The association relies on a survey by real estate advisor Capital Value, which shows that builders are currently making adjustments, delaying or even canceling projects for 25,000 planned new-build homes. Sometimes this also concerns projects for which the permits have already been issued. As an indication: in recent years about 70,000 new homes have been built every year.
The postponement or cancellation has various reasons. First of all, there is the mortgage interest rate increase, which is almost 4 percent again. This makes homes less attractive to investors. Of course, the borrowing capacity of buyers is also decreasing. And it’s not just about starters, because those who move up have a lot less interest advantage when they move. In any case, this group often thinks twice, for fear that prices will fall and the new home will be flooded.
There is also inflation with the rapidly declining purchasing power and the sharply increased prices for materials that developers encounter.
“This puts home builders in a precarious position: they have to design cheaper homes for a less wealthy market, while their costs and uncertainties increase sharply,” the report said. According to The Hague’s policy, the builders must also build the lion’s share – two thirds – affordably.
This does not always work, with the result: developers wait for better times and postpone their projects. In the first half of this year, the number of building permits issued fell by 18 percent compared to a year earlier. At the bottom of the line, new-build homes are becoming unreachable for many buyers, concludes WoningBouwersNL. “This is a disaster for home seekers, because the scarcity will only increase in this way.”
“Many people simply cannot or do not want to pay for a new-build home anymore, construction is no longer in line with the market”, responds housing market professor Peter Boelhouwer (TU Delft).
The number of new-build homes sold has therefore also fallen in recent months, according to the trade association. In the first half of 2021, 19,520 new homes were sold. In the first half of 2022, it was 16,946 – a decrease of 13 percent. Buyers are more likely to reconsider the purchase if, after an interest rate increase, it appears that they are unable to secure financing.
It is not only buyers who have less and less insight into a new-build home. Aedes, an interest group for housing corporations, recently concluded that there is not enough building land available for social housing. According to Aedes, the land that is there cannot be paid for.
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