Construction of new buildings shows no signs of recovery

26/07/2005 14:00

As yet the output of new buildings shows no signs of recovery. Output in the first six months of 2005 amounted to 9.0 billion euro, a reduction by 0.9 percent compared to the same period last year. The first quarterly figures over 2005 about building orders received by architect firms (-1.2 percent) give no indication of recovery. This leads to the conclusion that a revival in the construction of new buildings is unlikely to occur in the short run.

Construction of new dwellings increasingly important

Over the last five years the proportion of dwellings in total output of newly-built property has steadily increased. By the middle of 2005 nearly two-thirds of construction output consisted of dwellings, as against only 56 percent five years ago.

Construction volume new buildings (totals over 4 quarters, price level 1995)

Construction volume new buildings (totals over 4 quarters, price level 1995)

Slightly more houses built

There is an upward trend in the output of new dwellings. In the first six months of 2005 output equalled 5.9 billion euro, a 2.5 percent increase on the same period last year.

After the year 2000 fewer building orders were received. The setback was interrupted by the end of 2002 due to a stepped-up procedure to submit building plans to steer clear of new legislation regarding technical demands for the construction of new property as introduced by the Ministry of Housing, Regional Development and the Environment in 2003. As from 2004 the number of building orders as well as the output of newly-constructed dwellings improved slightly. Both are, however, still markedly below the level of the period 1995-2000.

Construction volume new dwellings (totals over 4 quarters, price level 1995)

Construction volume new dwellings (totals over 4 quarters, price level 1995)

Fewer non-residential buildings

Construction output in the first six months of 2005 amounted to 3.1 billion euro, a reduction by 6.6 percent compared to the same period in 2004. The reduction was mainly due to a lower construction output in the market sector (-13 percent). The upward trend in building orders received which started in 2004, could not be sustained. In the last two quarters the order volume shrank. Indeed output is unlikely to improve in the short run.

Construction volume new (non-residential) buildings (totals over 4 quarters, price level 1995)

Construction volume new (non-residential) buildings, (totals over 4 quarters, price level 1995)

Marius Reitsema and Robbert de Ruijter