Initial recovery of residential construction visible from early 2015. Vast potential for senior-citizen and single-person household housing market. Housing demand could be met by renovation of existing buildings as well as new construction.
Surge in number of homes sold is first sign of recovery in residential construction market
Sales of new-build homes are on the rise: the number of new-build homes sold in the first ten months of 2014 was 51% higher than in the same period a year ago; this figure is 39% for existing homes. The recovery of the construction market is largely dependent on the recovery of the housing market, as residential construction accounts for 40% of the construction market. ABN AMRO sees the first signs of recovery emerging in residential construction. The number of transactions involving existing owner-occupied houses has been on the rise since 2013, and prices have been inching up since April 2014. Residential construction shows a delayed reaction to developments in the housing market of up to eight months. With this in mind, ABN AMRO believes that the first signs of recovery of the residential construction market will probably become visible as from late 2014 or early 2015.
The Dutch are aging and living alone longer
The housing stock in the Netherlands is still aimed at families with children. The only type of household that is set to rise sharply in the coming years, however, is the single-person household. More and more Dutch people are living alone; at the same time, the population is aging. ABN AMRO foresees a sharp rise in the number of 65+ households up to 2040. This means that more small homes will need to be built. The needs of the growing number of senior citizens can be met partly by adapting existing homes.
Large demand for homes for senior citizens and single-person households
ABN AMRO believes that if residential construction recovers, homes will need to be built that meet the demands of the future, i.e. mainly homes that are suitable for single-person households and the aging population. These do not necessarily only need to be new-build homes; existing buildings, such as vacant offices, could be converted into residential property. ABN AMRO notes, however, that this differs from region to region. New buildings are not the most obvious choice in areas where the population is both aging sharply and contracting. Areas such as the Randstad conurbation, where there is a severe housing shortage, will require new construction.
Download the complete ‘Sector focus on residential construction’ below (in Dutch).