Slow housing construction keeps prices high
Rico Nederveen
12 November 2025
Reading time 4 minutes
Geis, A. (2023). Housing Supply in the Netherlands: The Road to More Affordable Living. IMF Selected Issues Paper No. 23/023
A recent analysis by the International Monetary Fund shows that the Dutch housing market remains structurally out of balance. Researcher Anna Geis (2023) concludes that slow construction activity keeps price pressure high, even as demand begins to cool.
Limited supply keeps prices elevated
In the report, Geis examines how the Dutch housing supply responds to changes in demand. The conclusion is clear: hardly at all. The Netherlands has one of the lowest supply elasticities in Europe. In other countries, rising demand leads to more construction, but in the Netherlands that pressure mainly results in higher prices.
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The housing shortage is estimated at 300,000 to 400,000 homes. The causes are well known but persistent:
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slow and complex permitting procedures;
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a shortage of suitable building locations;
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labor shortages in the construction sector;
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and environmental regulations that limit capacity, such as nitrogen emission rules.
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According to the IMF, the problem is not excessive demand but insufficient supply response. Policies focusing only on demand (through tighter financing or investor restrictions) do not solve the structural shortage.
Construction output continues to lag
Figures from Statistics Netherlands (CBS) show that the shortage keeps growing. In 2023, around 73,000 new homes were completed. In 2024, that number dropped to 69,000 new builds, supplemented by roughly 13,000 homes created through transformations or property splits.
In total, about 82,000 homes were added to the housing stock in 2024, fewer than in each of the previous five years.
The government still aims for 100,000 new homes per year, but that target has not been met for several years. As a result, the housing stock grows more slowly than the population, keeping price pressure high.
What does this mean for the housing market?
For buyers, the message remains the same: tightness in the market will not disappear anytime soon. Even with lower interest rates, limited supply will continue to support prices. Sellers benefit in the short term from this scarcity, but should be aware of potential policy changes. If permit procedures are accelerated or more land becomes available, the market could gradually cool.
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The IMF stresses that a structural solution is only possible through supply-side measures: faster permitting, simplified spatial regulations, and greater investment in building capacity.
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Outlook
The latest CBS data show that construction output declined again in 2024 despite policy efforts. While over 73,000 new homes were completed in 2023, the number fell to 69,000 in 2024—the lowest level since 2018. Including transformations, a total of 82,000 homes were added that year, while estimates from ABF Research suggest that at least 100,000 per year are needed just to prevent the shortage from increasing.
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Without structural reforms on the supply side, shorter approval procedures, more building sites, and greater implementation capacity at municipalities, affordability will remain under pressure. The conclusion therefore still holds: as long as construction remains slow and complex, the housing market will not return to balance.
