Next year threatens to be a difficult year for the construction of new homes because of a lack of land, high interest rates and increased building costs, housing minister Hugo de Jonge said in an update on Monday.

The government has a target of building 900,000 more houses by 2030 and some 90,000 were added last year, but next year in particular it will be “very difficult” to maintain the pace, De Jonge said. 

“The demand for housing is growing more strongly than expected, mainly due to migration,” De Jonge said in a 31-page briefing to MPs. “At the same time, the financial conditions for housing construction for the short term have become more difficult. This has made it all the more urgent to join forces and to continue to build sufficient suitable housing.”

The construction sector economic institute EIB estimates production will drop 3.5% this year and 5.5% in 2024. Developers organisation Neprom has also said it expects the production of new homes to fall by as much as 50%. It partly blames De Jonge’s plans to slap rent controls on up to 90% of the rental housing stock for the downturn. 

Just 12,800 permits for new housing were handed out in the first three months of this year, a drop of 28% from a year ago and the lowest total since 2016. Last year as a whole, local authorities granted permission for 63,400 new homes, but that too was down on previous years, national statistics agency CBS said earlier this month.

“The situation remains uncertain, but in any case, a sharp dip is expected in 2024,” De Jonge said. 

This year and in 2022, De Jonge made agreements with the 12 provinces on new building projects, but many of those have since been delayed or stalled. He is now calling on the local authorities to look for alternative locations.

“I am continually in talks with institutional investors, such as pension funds, about their contribution to public housing,” he said. “They are extremely aware of their responsibilities and are striving to book social as well as financial returns.”

De Jonge earlier outlined plans to slash the time it takes to build a new home from conception to completion, currently some 10 years, in half. Draft legislation is currently out to consultation.