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Demand for real estate is declining in Belgium amid rising interest rates. In the second quarter of 2023, the annual housing price inflation rate was 1.7%, in the third – 1.2%. The average inflation rate over the last four quarters is 3%, reports the country’s statistical office (STATBEL).
From January to September 2023, the number of housing transactions decreased by 17.5% compared to the same period in 2022, to 92,741. In the third quarter, the price index increased by 1.8% compared to the previous quarter – 0.71% in real terms. STATBEL explains that the index measures actual price movements without taking into account qualitative changes and is based on data on real estate transactions obtained from FPS Finances.
Results for recent quarters are considered preliminary and may be subject to revision. On an annualized basis, house prices were more or less stable, but when adjusted for inflation they fell by 3.4%. New housing prices rose by 5.05% (1.51% in real terms).
Compared to the third quarter of 2022, average prices for attached and semi-detached houses increased by 1.7%, i.e. by almost €5,000. Detached houses rose in price by 1.4%, apartments by 2.1%. The average cost of an attached or semi-detached house in Belgium was 264,500 euros, a separate one – 370,000. The most affordable housing in the Wallonia region is €180,000-295,000.
The most expensive Flemish apartments are located in the municipality of Knokke-Heist – the average price is 490,000 euros. The cheapest apartments in this region can be found in Sint-Truiden – 172,500 euros. Wallonia indicators range from 120,000 euros in Charleroi to 290,000 in Gembloux. In the Brussels-Capital Region, the municipality of Woluwe-Saint-Pierre is distinguished by its high cost – €352,500 euros, and Anderlecht is the leader in terms of affordability (€200,000).
Global property guide notes that the covid pandemic has not had a negative impact on the Belgian property market. In 2020, prices increased by 5.7%, in 2021 by 6%, and in 2022 by 4.8%. In 2023, both in this area and in the country’s economy as a whole, there was a slowdown. The cost of real estate remained overestimated – overvaluation ranges from 6% to 15%. Before the pandemic, this figure exceeded 50%, so for Belgium this is already a manifestation of a sharp decline.
The KBC Economics report said the market has been cooling for some time, but without a major correction and compared to other European countries, Belgium’s performance looks quite good. The Belfius study also shows moderate house price inflation (8.73%), most noticeably in the provinces of Antwerp and Walloon Brabant, east of Limburg on the coast, the region around Liege and the Brussels metropolitan region.
ING expects home revaluations to fall further this year and affordability to improve but remain worse than before 2022. Interest rates have fallen recently, but experts don’t expect a strong recovery in the real estate market in 2024. ING forecasts a moderate rise in house prices of 1.5%, which is effectively a decline in real terms given that inflation is likely to exceed 3%.
The European Commission estimates that Belgium’s real GDP growth rate will be 1 .4% in 2024 and 1.5% in 2025. The IMF predicts only 0.9% and 1.2%, respectively. The average gross rental yield in Belgium is low – 4.11%. The highest rates are in Brussels (5.54%), Liege (5.08%) and Antwerp (4.73%).
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