The land market and housing supply in The Netherlands

It is widely accepted that supply of new houses in the Netherlands has become unresponsive to market conditions. Generally, high and rising house prices are related to lack of construction. Insufficient and unrensposive construction is explained by a lack of land made available for house building. In its turn, scarcity of land is believed to be caused by restrictive spatial planning, which aims at keeping land free from development. In this paper, we will try to look at this problem from a fresh angle, namely the actual developments within the land market and land use, especially in the Netherlands. We will show that the amount of land used for urban functions is steadily rising. If spatial planning is aiming to reduce the amount of land for living and working, it is not particularly successful. Most interestingly, the amount of land available for building is now higher than it has been in the past decades. If fact, in 2006 this amount was 73% higher than in 1996. More recent figures are not yet available. In 2006, the amount of land available for building was 16.5% of the total area occupied by residential buildings. In principle, this should allow an increase of house building. Moreover, many new locations realized in the past fifteen years (the so called VINEX locations) have relatively low densities of only 10 houses per hectare. These locations were designated for housebuilding by the central government in 1993. Overall, it regards 240 sites in 57 municipalities with 265,000 houses realized between 1996 and 2007. In a situation of scarcity of land higher densities would have been expected. So, we tend to conclude that, although house building is not reponsive to high and rising prices, restrictive planning and lack of availability of land is not the only or even the most important explanation of stagnant house building. People who are critical about current planning often imply that more houses should be supplied in lower densities on small-scale locations. However, we believe that the most serious shortages are in the biggest cities and their immediate surroundings. In these areas, it is very difficult to increase supply as it involves building on brownfield sites. In the period from 2000 to 2006, already 43% of all new houses were realized in existing built-up areas. Raising the pace of construction in the main cities is only possible in case of large-scale redevelopment of existing urban areas. So far, this has nowhere been practised. In our view, as long as this consequence will be avoided, there will remain a structural shortage of houses in the most favoured cities of the Netherlands, resulting in high prices. Increasing supply at other locations will not succeed in solving this problem. The main mistake of spatial planning in the Netherlands has been that it, largely as from the 1960ís, has limited the growth of the biggest cities in the country.