The Housing Crisis – A Never-Ending Pain
A thorough investigation into the current housing crisis of the Netherlands, and the solutions the government has come up with.
First off, let’s start with a few simple questions:
Do you have a place to live?
Are you happy with the place you’re living in?
And lastly – do you find the pricing reasonable?
Now if you can answer all three with a solid yes – congratulations, you’re among a handful of lucky people in the Netherlands. As for the rest, they are exposed to the so-called housing crisis which has been unfolding in the country for the past 16 years.
What is the housing crisis?
In simple words: there are too many people, and too few homes for those people.
To put things into perspective: the Netherlands were short of 390 000 homes last year, which means that at least 390 000 people didn’t have a suitable place to live in or couldn’t afford one (That is ‹assuming that every home has one person living in it). That’s 2% of the population.
For comparison – the population of Groningen is 238,000. That’s like 1,5 Grunners not having a single home. Imagine that! And this problem is ever-growing.
Why did this happen?
The reasons, as always lie in the past. The financial crisis of 2008 caused many construction companies to go bankrupt, and the sector has not recovered yet.
The government has, according to many sources, been following dubious policies for many years. These include dismantling the ministry of housing; allowing vast purchases of real estate by foreign investors; over bureaucratising the process of obtaining a building permit and many more.
Additionally, one must remember that the Netherlands is a very attractive place for people to study and work. Due to a lack of new housing, accompanied by an ever-increasing amount of people moving to the Netherlands, the demand has increased, while supply has largely remained the same or, in many cases deteriorated. This drove the price up, making it impossible for people to afford both renting or buying a home. In fact, the lack of affordable housing for students has been so great that some students had to sleep in tents.
Environmental and social factors have also played their role. In accordance with the government’s nitrogen plan for 2030 (slashing all nitrogen emissions in half), very few new houses can be built as construction emits nitrogen. While the Netherlands is a successful producer of meat which is also a nitrogen emitting industry, the government attempted to reduce nitrogen emissions in this area by allocating 25 billion euros to buy out farmers. This failed and resulted in country-wide farmer protests in 2022. Here we see two nitrogen-emitting industries clashing with each other and one is currently suffocating the development of the other.
As for the social factors, there is the Neighbour law in the Netherlands which gives one's neighbour significant influence over how they can modify their property. Social groups such as climate activists can protest construction projects they deem harmful to the environment, preventing construction companies from completing them.
All in all, there are many reasons for the housing crisis, the above are just the major ones. Consecutively, one should also mention that the Netherlands is a small country with a large population density, which also poses obstacles to major construction such as in the US.
How can we solve this?
Now let us move towards the brighter side of things: solutions!
The major step taken by the government was reclaiming the land taken by the sea, this worked incredibly, increasing the land mass of the Netherlands by 17%.
Some of you might think to yourself why not just build more wherever you can and use the 25 billion euros intended for farmers, to reduce housing prices? Now the government came up with the above too, however, these measures proved to be less effective than anticipated.
People exploited the subsidy system for their own benefit - high-earners stayed in subsidised social housing to avoid paying expensive rents. Others, such as foreign investors used the subsidies to buy up more property and rent it out at even higher prices.
However, the government did not give up, and imposed new rules and regulations such as the buyout protection rule which states that: “If you purchased a property with a valuation (WOZ value) of up to and including €641,000 after 1 April 2022, you may not rent out the property for 4 years”. This is slowly improving the situation, nonetheless as per our analysis more pivotal measures are required.
One good solution to the housing crisis seen in the EU are the Netherlands' European neighbors – the Danes. The Danish government imposed a quota of 25% for social housing for all new projects built. To put it simply – if you build 100 new housing units, 25 of them must be purposed for social housing, i.e. have reduced rents, and cannot be sold to private investors. Additionally, the Danish government furnishes developers with 40-year interest-free loans which keep the affordable and social housing rentals below market rates.
To summarize the above, the housing crisis is a long-standing problem in the Netherlands, however, there are working solutions to this issue.