Why can’t we build more houses?
Editie: 30 - Shifts in the Real Estate Industry
Published on: 31 mei 2023
Maybe we should ask a computer…
As we all know the Netherlands is coping with a housing crisis. There was a shortage of 279.000 houses in 2021 and this is expected to grow till 2024 (Ministerie van Binnenlandse Zaken en Koninkrijkrelaties, 2021). 900.000 houses need to be developed before 2030, with the goal that 100.000 dwellings are constructed per year (Actieagenda Wonen, 2021). This is a large challenge for the residential construction sector. The goal to build 100.000 houses per year will not be reached this year and coming year. The construction in 2023 and 2024 is expected to not go over 70.000 houses (NOS, 2023). The policy of the government is not always in line with the wishes of the sector. It is not easy to find a solution for increasing the number of houses constructed per year, since there are multiple reasons that cause the delay. In line with the theme of this magazine “Shift”, the question was asked to the upcoming and well-known ChatGPT; what is the reasoning behind the fact that this goal is not reached. The construction sector is occasionally called conservative, so maybe a knowledgeable, self-learning computer knows the answer before the sector itself has solved the housing crisis.
ChatGPT is an Artificial-Intelligence (AI) chatbot that is built on many different so-called ‘families’ of larger (programming) language models, meaning it can understand many terms and create a very diverse output. These state-of-the-art-languages are called GPT-3 (Generative Pretrained Transformer 3) and GPT-4 and are also known as processing AI models developed by OpenAI, an American Organisation specialized in AI research. The chatbot was officially activated by OpenAI in November 2022, gathering all its data from sources such as digital encyclopedias (Wikipedia), news sources, scientific journals, digital books and more. It can generate answers written in human language, making itself capable of engaging in a human conversation (Hughes, 2023). This claim gets tested by asking ChatGPT what its opinion is on the current state of the Dutch ? housing market.
As a side note, it must be placed that the knowledge of ChatGTP is not completely up to date, its input is generated from all sources up to 2021. For example, it did not know that Hugo de Jonge is the Minister of Housing in the Netherlands, its knowledge was only present until the year 2021. So, the answers also cannot include all the trends and developments within the sector over the past year. However, it seems still quite valid. Underneath the answer can be found that ChatGPT gave to the question of why the goal of 100.000 houses is not reached. The bot even gave some suggestions to scale up the rate of construction. The answer of the chatbot will also be discussed further in this article.
Joep Dirx to ChatGPT:
The Netherlands is dealing with a housing crisis. To solve this, there is a goal by the government to develop 100.000 houses per year. However, this goal is not reached. What is the reasoning behind the lacking number of houses that is developed per year?
ChatGPT (ChatGPT, 2023):
The Netherlands is currently facing a severe housing crisis, with a shortage of affordable housing across the country. This has led to rising rents, increased homelessness, and a growing sense of urgency to find solutions to the problem. The Dutch government has set an ambitious goal to develop 100,000 houses per year to address the housing shortage, but this goal has been difficult to achieve due to delays in real estate development projects.
One of the main reasons for the delay in real estate development projects is the complex and time-consuming municipal policy and procedures that developers must navigate in order to obtain the necessary permits and approvals. In some cases, it can take years for developers to get the green light for their projects, which can cause significant delays and drive up costs.
Municipal policy and procedures play an important role in ensuring that real estate development projects are planned and executed in a responsible and sustainable manner. However, the current system is widely considered to be outdated and bureaucratic, with too many regulations and too much red tape.
To address this issue, the Dutch government has introduced a number of measures aimed at streamlining the municipal policy and procedures for real estate development projects. These measures include simplifying regulations, reducing bureaucracy, and improving coordination between different municipal departments.
Despite these efforts, progress has been slow, and many developers continue to face significant delays and challenges in getting their projects off the ground. This is especially true in the current economic climate, where the COVID-19 pandemic has had a significant impact on the real estate industry.
In addition to the challenges posed by municipal policy and procedures, there are also other factors contributing to the housing crisis in the Netherlands. These include a lack of available land for development, a shortage of skilled labour in the construction industry, and a lack of affordable financing options for developers.
To address these challenges and meet the goal of developing 100,000 houses per year, a more comprehensive and coordinated approach is needed. This could include a combination of measures, such as:
- Increasing the availability of land for development: This could involve repurposing underutilized land, such as brownfields or industrial sites, for housing development, or exploring new options for vertical urbanization, such as building more high-rise developments.
- Encouraging more sustainable and innovative construction practices: This could involve promoting the use of sustainable materials, energy-efficient technologies, and prefabricated building methods, which can reduce costs and speed up construction times.
- Investing in the construction industry: This could involve expanding training and education programs to address the shortage of skilled labor in the industry, and providing more support for small and medium-sized construction firms.
- Improving access to financing for developers: This could involve creating new financing options, such as low-interest loans or tax incentives, to encourage investment in housing development.
- Encouraging collaboration between public and private sectors: This could involve creating more public-private partnerships to support housing development projects, and improving communication and coordination between different levels of government and the private sector.
In conclusion, the housing crisis in the Netherlands is a complex and multifaceted problem that requires a comprehensive and coordinated approach to address. While the goal of developing 100,000 houses per year is ambitious, it is clear that the current system of municipal policy and procedures is a major barrier to achieving this goal. By streamlining regulations, reducing bureaucracy, and improving coordination between different municipal departments, the Dutch government can create a more favorable environment for real estate development projects, and help to address the urgent housing needs of the country.
So, did ChatGPT give the solution we have been looking for?
To begin the reflection on the answer of ChatGPT, it can be said that it is looking in the right direction. Many professionals from the real estate sector will agree with the bot that the procedures with the government are one of the reasons behind the delay in development projects. However, in my opinion, it misses one significant development from the past years, namely the increase in construction costs. It is a problem that municipalities are not capable to process the number of wanted environmental permits to meet the goal of 100.000 houses and the number of approved permits is decreasing (Capital Value, 2023). Despite that, the decrease is also due to real estate developers themselves. They are also procrastinating their permit application due to the high construction costs: construction has become too expensive, resulting in development projects which are not feasible anymore. The ChatGPT mentions several measures the government has introduced to solve this problem. However, the belief that these measures, if even realized at all, will reduce the time in which permits, and plans are approved is not there in the sector. Besides that, the ChatGPT stated five interventions to improve the rate of construction. These five interventions are indeed solutions to the problem, but they are said easier than executed. If it was this easy, then there would not have been a housing crisis at all.
To conclude, the ChatGPT has a real opinion, it looks at the situation as most of the sector does. But maybe, the ChatGPT is a bit too philanthropical. The answers are not as easy as the bot suggests. The bot stays on a computer and for that reason cannot look at the situation in a dynamic view. Although it is interesting, it is still artificial intelligence that can not (yet) compete with real humans, real feelings, and an in-depth understanding of the situation.
References
Actieagenda Wonen. (2021). Samen werken aan goed wonen. Actieagenda Wonen.
Capital Value. (2023, March 27). 27 procent minder bouwvergunningen in januari 2023. Opgeroepen op April 10, 2023, van Capital Value: https://www.capitalvalue.nl/nieuws/27-procent-minder-bouwvergunningen-in-januari-2023
ChatGPT. (2023, March). ChatGPT. Opgehaald van OpenAI: chat.openai.com
Hughes, A. (2023, April 3). ChatGPT: Everything you need to know about OpenAI’s GTP-4 tool. Opgeroepen op April 10, 2023, van Science Focus: https://www.sciencefocus.com/future-technology/gpt-3/
Ministerie van Binnenlandse Zaken en Koninkrijkrelaties. (2021). Aanbieding Rapport Staat van de Woningmarkt 2021. Den Haag: Rijksoverheid.
NOS. (2023, January 26). ‘Woningbouw zakt terug, ook volgend jaar veel minder nieuwe huizen’. Opgeroepen op February 2, 2023, van NOS: https://nos.nl/artikel/2461270-woningbouw-zakt-terug-ook-volgend-jaar-veel-minder-nieuwe-huizen
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