Housing development and the financial crisis. From ‘governable’ and ‘malleability’ to citizen-driven development.

A few years ago nobody believed self-building would root in The Netherlands. The country was dominated by large-scale, top-down developments where customers had little to say about the eventual product. This changed during the global financial crisis of 2008 when banks became unable (instable) or unwilling (biding their time) to lend money to each other. Financing possibilities disappeared and developers turned out to have insufficient capital to continue construction projects. Moreover due to lower housing prizes, the return did no longer outweigh the risk of the investment. This scarcity of credit, price drops and uncertainty paralyzed both the demand and supply side. [Peek, 2015, Vulperhorst, 2009]. A large portion of the construction industry and development companies went bankrupt and construction in The Netherlands came to a halt. But where traditional development failed to adapt to changing economic circumstances, new experiments, new housing concepts, new living choices and new private financiers arose. Individuals and small-scale companies succeeded where the larger ones, even the extraordinary ones, failed.

What happened before and during the crisis to make the hierarchy suddenly change? Why did private commissioning succeed? And how will things proceed in this new landscape? In this research blog, based upon a literature review and expert interviews, I will try to give a brief historical overview and answer these questions. Basically we can devide housing or real-estate history within three phases: until the 1980s a governable period, until the economic crisis a malleable period and lastly demand driven production. Dan Hill uses in this context the definitions ‘Go build!’, ‘Built it and they will come’ and ‘We’re here; lets built it!’. [Hill 2016]

Governable, “Go build!”

To understand the Dutch housing market, we have to go back to the large population boom and reconstruction work just after the Second World War. These events created a massive housing shortage, which led to a governmental policy to sort out public housing. From this moment on the government was responsible for large-scale housing developments and a top-down oriented approach. Until the 1980s building- and real-estate companies worked within a market and conditions dominated by the government. The government asked, navigated and financed what the companies were building. Construction was based upon large companies, efficiency, reducing development risks and low cost, resulting in a high degree of standardization. A combination of economic downturn in the 1980s and an ever-stronger sentiment within society that the intimate relationship between politics and the construction industry was too close, put an end to this policy. [Vulperhorst, 2009] Due to these efforts for a smaller government, the building and construction sector was henceforth left to the market.

Malleability, “Built it and they will come”

The 1990s are characterized by large increases in housing prices, declining interest rates, rising incomes and great confidence in the economy. The real-estate sector in the Netherlands turned from a rental-oriented one to an owning-oriented market. The demand for homes rose sharply, while the production was lagging behind, resulting in additional pressure on house prices. [Elsings, 2011]. The sector was flourishing in these times and many new developers joined in. Companies adapted their business models to the fact that land, easy credit and networking are the key success factors for doing business. And they focused on standardized large-scale solutions, building whole neighborhoods in one go. [Vulperhorst, 2009]


three phases


After studying several reports about the characteristics of the construction sector and the financial one we can name four notions that caused unhealthy market circumstances during this period:

First the market thrived on the notion of over-indebtedness. Lending capacities for home owners were increased and next to that banks were prepared to finance construction with limited, or even no, capital from developers and homeowners. At this moment The Netherlands is one of the countries with the highest mortgage debts in the world and therefore a high ratio of total debt versus national income. [Vulperhorst, 2009, RLI, 2014, de Waard, 2012]

Secondly, developers and contractors were mainly building houses in higher price segments because those created more surpluses. And since the banks were easily lending money, people could afford them anyway. Luckily The Netherlands was saved from speculative building because financiers asked 70% of houses to be sold before construction could commence [Dol et al. 2010]. However, people who own just above social housing level were largely unable to find affordable housing.

The third notion is the possibility of equalization that is offered by the Dutch integral approach where government and market work closely together. Commercial real estate funded the less profitable functions like greening, infrastructure, social property and social housing. [Buitelaar et al., 2013; Rli, 2014] In this way institutions made the social program dependent on the outcomes of the commercial program. ‘The developers focus is on the development of plots, not on good public space or common amenities (other than retail). If greenery is promised, we should especially be wary of what’s sold to us.’ [Boer, 2016]

When projects became too complex or too expensive the whole development would come to an end. Everything needs to work, because everything is cross-linked, leaving no room for unpredictability and new insights. ‘The scale and duration of the projects resulted in huge investments for purchase of land and buildings, high costs and long payback periods. This stimulated the effect of a ‘hog cycle’, in the meantime demand could have changed and deficits only eliminated after a long time. Equalization made sure this temporary market failure could be captured and was not seen as a signal of insufficient demand in the market.’ [Buitelaar et al., 2013]

And lastly, the construction and property sector turned out to be particularly vulnerable to irregularities, some of them criminal. The competition law was infringed because cartel deals were made in all subsectors, there was talk of forgery and bribery and large-scale fraud in the real estate sector. [Vulperhorst, 2009].

In his real-estate essay of 2009 Lenny Vulperhorst listed the reasons for this vulnerability:

  1. A unique product within a complex process: There are many projects, many parties involved, many phases (which take a long time) and many financial transactions.
  2. Business to business model: ‘Give a little, take a little’ together with ‘get the money and run’. Short-term goals conquer long-term strategies and business development.
  3. Low trust: Companies do not trust each other, which leads to a jurisdiction of relationships.
  4. Low barriers to entry: Banks would finance newcomers easily.
  5. Recruitment and socialization: Making a deal is most important. The quality, price, beauty or a good building process are no match against it. Only a handful of developers or construction companies look back ashamed of the bad constructions they have made.
  6. Low probability of detection: The various sectors of the construction and property sector are relatively closed. Meaning they do not often discredit colleagues.

Another significant problem in the real estate sector was not necessarily its unhealthiness, or vulnerability, but the fact that both homes and offices are more or less designed for an anonymous market. ‘If there is a customer involved it usually has a limited influence on the product. Most of the time a classical supply driven approach is used. A method that is successful when demand is high, but faced with large problems when it stagnates. Being based upon short-term successes a supply driven method does not lead to continuity.’ [Vulperhorst, 2009] Specifically this point is reversed with the rise of citizen-driven development. The market is no longer anonymous, but initiates and produces the new residential areas itself.

Demand driven, “We’re here; let’s build it!”

The large scale, top down housing production in the Netherlands have made Dutch housing consumers highly dependent on supply and standardized houses. Which led to average products for an average audience. The economic crisis of 2008, and the change it involved for housing demand, demonstrated the risks and flaws of this supply driven method as the construction industry went into a radical decline. [Oosterhof, 2012]


econ crisis2


A new bottom-up citizen-driven real estate development, focused on flexible, small scale and phasing surfaced. The municipalities, often after fruitless waiting for the industry or market to reestablish, started giving out smaller sized plots, creating a new audience of buyers of small groups and individuals who could suddenly afford to buy land. Almere, as one of the first, chose a strategy based upon demand: one could only built if there was an actual (market) demand. A cultural change, from planning to the unplanned city, aimed at giving space to a variety of initiatives. [Oosterhof, 2012] Housing in most countries is self-built, however in Western European cities, and the Netherlands especially, it is reintroduces as a policy for urban development. [Boer, 2016]

“The reason this type of development continued on pace during the prolonged real estate crisis was perhaps because of the simplicity of the development model, and, as a result, of the simple financing model, which by-passed, to a large extent, project finance loans, risk management committees, credit-board reviews, and other manifestations of financialization. This was real people building real houses with real money.”

Matthijs Bouw, architect and founder of One Architecture


photo: Victor Wollaert

photo: Victor Wollaert

Several authors connect the citizen-driven development and all that it involves to changing times and shifting priorities within society at large. New parties, negotiating partners and financiers have become part of spatial development and each one of them uses terms like flexibility, small scale, bottom up, selforganisations, organic development and temporality. [Niemand, 2012][Kooistra, 2012] In an interview with Gert-Joost Peek he points out the crisis was perhaps too short to really consolidate things. But still, considering the strong sense of a citizen-driven undercurrent, he likes to talk of a societal transition.

The end user is much more important within these new business models, design and construction processes. And within this approach there is an increasing appreciation of new values, maximizing impact, rather than profit maximization. But where the old instruments focus on yield thinking, the new ones that support and organize moneyflows, quality, sustainability and involvement have yet to be developed. [Joost, 2015] [Peek, 2015]

The upside of a demand-driven approach is that homeowners are allowed to have specific wishes. Instead of having to choose from standard products, they can adapt the house, in various forms of participation, to their own lifestyle and sense of quality.

“The problem with financialization in supply-driven building is that money flows are part of conjuncture sensitive systems. The willingness of institutions to invest is not linked to people but to risk analysis. With self-building the willingness to invest is about dreams, changing family situations, etc. Traditional financial models are abstract and do not take wishes of people into account. Institutions cannot cope with that uncertainty. To ensure continuity in creating resilient cities, we need to specify where to invest and what to gain, with the advantage that the direct involvement becomes larger.”

Matthijs Bouw, architect and founder of One Architecture

Produce series of one

René Boer and Mark Minkjan listed a few problems with self-build developments that need to be addressed at some point [Boer, 2016]:

Space for these type of development is limited, especially in popular cities. Municipalities rather have one larger development, than all these small processes, because it is easier to manage and therefore cheaper. Citizen driven development shows that changing to a participatory society, something the national government is currently advocating for, also requires a large (or perhaps even larger) institutional support. Next to that there are issues with inclusivity. Even if there are plots, they are usually taken by the well-informed, best-connected people. And secondly, self-building is quite expensive, making it (usually) a middle-class affair.

Experience has told that the construction industry is struggling to find a way to embed flexibility within the building process. As said before, since WWII, the whole construction chain focused on efficiency, making large series of standardized products for low cost. At best, choices were given in the final phase, in which the product could be somewhat adjusted with bay windows and dormers. Giving full flexibility and choice options is in the current system not possibly yet. For example profit for contractors is often made with supplier contracts. Residents choosing taps from another party will have to cover these costs. If these developments are indeed a real transition waiting to happen, where consumers are able to fulfill all lifestyle wishes, building companies need to be ready to accommodate options and customer demands.

“We need to develop the ability to use a large and industrial perspective to produce ‘series of one’. Splitting plots into smaller pieces leaves room for collective measures around parking and sustainability, but creates the opportunity for a larger segmentation than we are used to.”

Lenny Vulperhorst, management consultant and partner Andersson Elffers Felix

In recent years also the larger companies have picked up this sense of new, shared ideals and start to change their business towards it. In Buiksloterham, for example, the institutional actors are ‘slowly starting‘to develop projects with a distinctly Buiksloterham vibe. Housing Corporation ‘De Alliantie’ is developing ‘Cityplots’ as a diverse, mixed-use area with room for self-development and a high, circular ambition. Waternet, the water utility, is working on a ‘bio-refinery’, a decentralized waste management system.’ [Bouw, 2016].

The question remains however how much of this new spirit will last when the real estate market is bouncing back and global capital has found its way to Amsterdam again. And if companies do take a citizen-driven approach, how much value will they attach to involvement? How much participation will they allow and from which point in the construction process are homeowners involved?




René Boer, Mark Minkjan, Self-builds: Between unruly real estate markets and failed housing policies, July 1, 2016, http://www.failedarchitecture.com/self-builds-between-unruly-real-estate-markets-and-failed-housing-policies/

Matthijs Bouw, Economic Resilience at Buiksloterham, Amsterdam 2016 http://thehackablecity.nl/2016/04/11/economic-resilience-at-buiksloterham/

Buitelaar, E., N. Sorel & F. Verwest, Gebiedsontwikkeling en commerciële vastgoedmarkten, 2013, Den Haag/Amsterdam: PBL/ASRE. http://www.pbl.nl/sites/default/files/cms/publicaties/PBL_2013_gebiedsontwikkeling-en-commerci%C3%ABle-vastgoedmarkten.pdf

Kees Dol, Harry van der Heijden, Micheal Oxley, Economische crisis, woningenmarkt en beleidsinterventies; een internationale inventarisatie, Delft January 22, 2010 https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/rapporten/2010/06/02/economische-crisis-woningmarkt-en-beleidsinterventies-een-internationale-inventarisatie/economische-20crisis-20woningmarkt-20in-20internationaal-20perspectief.pdf

Marja Elsings, Martijn de Jong-Tennekes, Hans van der Heijden, Eindrapport crisis en woningmarkt, TUDelft, June 15, 2011 https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/rapporten/2011/09/12/crisis-en-woningmarkt-eindrapport/eindrapport-crisis-en-woningmarkt.pdf

Dan Hill, The Social and the Democratic, in the social democratic European city, 2016 http://designandthecity.eu/dan-hill-the-social-and-the-democratic-in-social-democratic-european-cities/

Arnold Joost, Coöperatieve gebiedsontwikkeling, Leren professionaliseren, van niche naar mainstream: over kunnen, willen en mogen, 2015 https://issuu.com/pakhuisdezwijger/docs/cooperatieve_gebiedsontwikkeling

Geert Kooistra en Petra Maas, Van grondexploitant naar bondgenoot, Ruimtevolk Jaarboek 2012, page 59

Arienne Mak, Loslaten met visie, Dag van de ruimte Novermber 18, 2010: Nieuwe idealen, Gebiedsontwikkeling.nu https://www.gebiedsontwikkeling.nu/artikelen/loslaten-met-visie/

Jeroen Niemand, Eigenaarschap in de ruimtelijke ordening, Ruimtevolk Jaarboek 2012, page 22

Gert-Joost Peek, Veranderstad, Stedelijke gebiedsontwikkeling in transitie, 2015 https://issuu.com/gert-joostpeek/docs/def_hr-gert-joost-peek-170x240mm_lr/1?e=1

Annet Ritsema, Ruimte voor de Tussenmaat , March, 8, 2013 CREA Amsterdam http://www.pbl.nl/sites/default/files/cms/WS14%20-%20Annet%20Ritsema.pdf

Wiebe Oosterhoff, Harry Zondag, Martijn Ubink, Duurzaam Almere, De stedelijke strategie van Almere, Themanummer June 2012 http://www.duurzaamalmere.nl/wp-content/uploads/downloads/2013/01/Def-digi-Stedelijke-strategie.pdf

RLI, Kwaliteit zonder groei, Over de toekomst van de leefomgeving, March 2014 http://www.rli.nl/sites/default/files/linkitfiles/essay_rli_planning_in_an_environment_without_growth_29102013_revised-1.doc

Marieke Seip en Marco Horman, Nieuw eigenaarschap in de ruimtelijke ordening, Ruimtevolk jaarboek 2012, page 154

Lenny Vulperhorst, Vastgoedlezeing ASRE 2009 http://files.vastgoedbibliotheek.nl/Server/getfile.aspx?file=docs/publicaties/vastgoedlezing_2009.pdf

Peter de Waard, Volkskrant, DNB waarschuwt voor derde crisis: de vastgoedcrisis, February 4, 2012 http://www.volkskrant.nl/economie/dnb-waarschuwt-voor-derde-crisis-de-vastgoedcrisis~a3155721/

Interviews with Hans Karssenberg, Agnes Franzen, Willemijn Lofvers, Gert Joost Peek, Lenny Vulperhorst, Theo Stauttener

Lenny Vulperhorst has written a column about our discussion for Cobouw: http://www.cobouw.nl/column/1627736-burgerlijke-initiatieven