Dutch housing permits hit 10-year high, but construction still slow off the ground
At a Glance
The Dutch construction sector is experiencing a rebound in building permits, reaching a ten-year high, which generates cautious optimism for future housing construction. However, per the full note from ING, the expected increase in permits is unlikely to translate into a rapid rise in actual housing starts due to significant delays often encountered in the building process. As a result, while the overall construction volume is projected to stabilize by 2026 with a modest increase thereafter, the current construction activity remains subdued. The broader implications for the EUR may hinge on these domestic economic signals, especially if they affect policy decisions by the European Central Bank moving forward.
Key Takeaways
- 01Dutch housing permits reached a ten-year high, with 10,628 issued in May 2023.
- 02Construction activity is expected to stabilize only by 2026, reflecting a slow recovery in actual housing building.
- 03The backlog of permits suggests that housing starts typically trail by 10,000 to 15,000 units each year.
- 04EUR/USD may be sensitive to future construction trends impacting local economic sentiment and ECB policies.
Full Analysis
What the desk is arguing
The desk interprets the rising number of building permits in the Netherlands as a potential precursor for future construction activity, albeit one that will materialize slowly. Specifically, the record issuance of 10,628 permits in May, while a promising sign, underscores the persistent lag in housing starts that typically trails permits by 10,000 to 15,000 units annually.
Moreover, expectations for housing completion suggest only approximately 71,000 new homes will be constructed in 2026, gradually increasing to 74,000 in 2027, leaving more room for a cautious approach from investors. The desk recognizes that any robust rebound in actual construction is still muted by planning and economic variables often beyond the sector's control.
Where it sits in our coverage
Currently, our consensus target for the EUR/USD pair is set at 1.075, with expectations range between 1.04 and 1.12. Notable targets from other institutions include: - jpmorgan: 1.10 by Mar26 - bofa: 1.04 by Mar26
Given this context, the desk's call is more optimistic than bofa, aligning closely with jpmorgan, suggesting potential upward movement in the euro if housing construction stabilizes more robustly than expected.
How other firms see it
Most firms seem to share a cautious outlook regarding the Dutch construction sector, favoring a gradual recovery similar to our take. However, bofa stands out with a more bearish perspective, suggesting a slower-than-expected rebound.
Traders should keep an eye on the EUR/USD trajectory as it parallels broader sentiment and potential actions from the ECB. Economic metrics from the housing market may serve as crucial indicators influencing future monetary policy approaches.
Market Implications
Investors should watch for movement in EUR/USD around the consensus target of 1.075, especially as further data on construction activity are expected to influence longer-term economic outlooks. Additionally, any shifts in the ECB's stance may correlate with developments in the housing sector.
From the original
Articles Dutch housing permits hit 10-year high, but construction still slow off the ground Published 08:55 Manufacturing, Construction and Retail The Netherlands Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The Dutch construction sector is expecte
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