Global Politics Explainer

CWA # 1520
Global Politics Explainer
The Housing Crisis in the Netherlands: What has caused it and what has been the government response?

Advik S Mohan
26 October 2024
Photo Source: alertfonds.nl

Amidst the ongoing housing crisis in Europe, the Netherlands is one of the worst affected countries. There has been a shortage of houses in the country for the past three years. According to research agency ABF, the country had a shortage of around 401,000 homes in 2024.  The Dutch government aims to bring the deficit down to two per cent of the total housing stock. 
The crisis has made it more difficult for middle-income households and individuals in the Netherlands to find a home. House prices are estimated to have increased by at least 150 per cent in the past decade. The average home in the Netherlands now costs EUR 452,000, over 10 times higher than the average salary in the Netherlands. The country has a shortage of an estimated 401,000 homes. Due to the high demand, it takes about seven years on average to find a permanent home

What has caused the Housing Crisis in the Netherlands?
First, the failed policies of the Dutch government. The government has always been focused upon stimulating the financial market demand to ensure potential house buyers have the funds required to buy homes. For instance, jubelton or tax breaks have been provided for potential house buyers.  However, the Dutch government has failed to stimulate the supply of new homes. Dutch governments have focused little on ensuring the proper construction of quality homes for residents.  

Second, the influence of the neo-liberal ideology in the Netherlands. The Dutch government allowed housing corporation stock to be sold to large investors with financial resources, including foreign ones.  As a result, about 25 per cent of all homes in the four big cities of the Netherlands are owned by investors.  Without proper measures to improve the housing supply, measures like mortgage tax relief for buyers have resulted in housing prices being further driven up, with only the entrenched investors and owners benefitting.  In 2010, the Dutch government even abolished the Ministry of Housing, Spatial Planning, and the Environment. 

Third, the rapidly increasing population. The Netherlands is expected to cross 20 million citizens in 2024. The Dutch population has substantially grown in the past decade, with an estimated three million individuals entering.  The substantial population growth has also contributed to the demand for housing increasing. This has resulted in several politicians such as Geert Wilders, the leader of the right-wing PVV which got the most votes in the general elections last year blaming immigration for the crisis. 

What has been the government response, and how effective have they been?
One step taken by administrations in the Netherlands was the decision by several big cities in the Netherlands such as Amsterdam and Rotterdam to ban investors from buying homes in specific neighborhoods. The objective behind this policy was to allow first-time buyers better chances at finding a home. However, a study by the University of Amsterdam and Erasmus University found the policy had a minimal impact. According to the study, the policy benefitted middle-income households and tenants who could already afford houses. Moreover, the policy negatively affected lower-income tenants since rent prices increased by 4 per cent. Another governmental policy aimed at combating the crisis through restricting homes to tenants earning less than EUR 44,000 a year resulted in more landlords selling homes, increasing private sector rents.

 Another key step taken was granting individual municipalities in the Netherlands with the power to take steps to discourage investors and big landlords from buying up homes, such as a self-occupancy rule requiring property buyers to prove they would be living there as well. In the same light, the transfer tax rate on individuals who bought property for investment purposes without residing in the property bought was increased to nine per cent from two per cent. These steps aimed to help homes be bought by first-time buyers such as the youth more than landlords who already owned property. However, the share of free-sector rental houses is not enough to meet the large housing shortages, and also does not provide a lasting solution for the problem of individuals not owing their houses.

Additionally, the government began transforming spaces like cruise ships, apartments, hotels and office buildings into temporary housing and accommodation. This was aimed mainly towards asylum seekers and refugees in the country without a home, but also for the general population lacking a home.  However, this has proven to be only a temporary solution. 

What Next?
The Dutch government which took office earlier this year set the target of building 100,000 homes per year, with an estimated EUR five billion allocated for that purpose. An additional investment of EUR 2.5 billion is planned, to make the residential areas of the country more accessible to live for residents. However, a lasting solution to the housing crisis is possible only through structural changes. Due to the failure of the government to resolve the crisis effectively, initiatives launched on an individual level have tried to mitigate the crisis. In 2020, a group of students began an initiative known as De Torteltuin which plans to complete a sustainable housing collective involving a block of 40 apartments and a shared living area for every four to five households by 2026. Similarly, forty-eight adults launched a sustainable housing community known as Ecovillage Boekel, comprised of 36 sustainable flats. This ecovillage includes building homes with bio-sustainable materials like wood, and a heating system which stores solar energy.  Initiatives like these on a national scale implemented by the Dutch government could help in mitigating the crisis. The Austrian capital of Vienna offers a potential model of social housing to follow. Vienna provides both public housing owned by the local government, as well as rent-controlled housing run by housing associations. Moreover, the middle class is not excluded from housing, since 75 per cent of the population qualifies for governmental guidelines for owning a house. Additionally, the city has restricted private investment and rentals, keeping rent prices low. 

References
Orla Barry, “As Dutch residents struggle to find housing, some are trying new initiatives,” The World, 30 May 2024
“Dutch housing shortage rises to over 400,000 as population growth outstrips construction,” NL Times, 12 July 2024
“Government policy, not immigrants, the cause of Dutch housing shortage: UN Rapporteur,” NL Times, 06 March 2024
Dr Gregory Fuller,  “Opinion: The failed housing policy of VVD and CDA is to blame for the housing crisis, not migrants or environmental regulations,” University of Groningen,  13 November 2023
Senay Boztas, “ “Stop inciting foreign hatred”: UN housing rapporteur,” Dutch News, 06 March 2024
“Buy-to-let ban is good for first-time buyers but bad for tenants,” Dutch News, 19 June 2023
“Tackling The Housing Crisis In The Netherlands: Solutions And Strategies,” 348 Suites
Aurora Velez,  “Ecovillage Boekel: Discover the Netherlands’ award-winning, sustainable housing community,” Euro News, 04 December 2023
Jon Henley,  “‘Everything’s just…on hold’: the Netherlands’ next-level housing crisis,” The Guardian, 06 May 2024
Sarah O’ Leary, “7 things the Dutch government is doing to tackle the Dutch housing crisis,” DutchReview, 23 September 2022.


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