If housing prices continue to rise as they did last quarter, homebuyers may pay an average of half a million euros by the end of the summer. To increase affordable housing, the government will allocate 5 billion euros in subsidies over the coming years.
However, the Central Planning Bureau (CPB) concludes that landowners are more likely to benefit from these subsidies than homebuyers. The CPB’s research suggests that if the subsidies are applied as before, they could primarily result in higher land prices.
This means the subsidies may end up benefiting landowners rather than those seeking homes. To meet the demand, 100,000 new homes must be added annually.
This could help curb significant price increases, making homes affordable again for low and middle incomes. Nonetheless, the issue in the Netherlands remains a lack of space for building, according to the CPB.
The CPB suggests that subsidies are most effective when used to offset mandatory lower rents for new housing. Due to high construction and labor costs, many projects become too expensive if they are only rented out at lower rates.
Subsidies could also support municipalities lacking funds for infrastructure like roads in new developments. The government’s plans already include a 2.5 billion euro investment in roads and public transport for new housing, in addition to the 5 billion euros for housing subsidies.
To ensure the subsidies benefit home seekers rather than landowners, the CPB advises revising land policies, such as imposing higher taxes on land increased in value due to development plans. Additionally, the CPB recommends that these subsidies be temporary.
Source: NOS