BELGIUM: HOUSE PRICE GROWTH TO MODERATE AFTER A STRONG RUN

Homeownership in Belgium sits at more than 70%, while about 20% of households rent at market prices and just under 10% rent at reduced prices. This situation is quite stable and has been the case for at least 20 years.

The rental market is mainly occupied by private and small investors. In recent years, however, it seems that larger private investors and institutional investors have been gaining more traction.

Activity in the housing market recovered fast after the first lockdown in 2020 and the number of transactions in the first three quarters of 2021 was higher than in the three previous years. The strong activity applied to all segments (houses, detached properties and apartments) and all regions (Flanders, Wallonia, and Brussels Capital Region).

Price growth was strong and accelerated during the pandemic. In 2020, Eurostat recorded a 4.2% increase in house prices and in 2021 we expect about 7% growth. Even though price growth accelerated and was strong in Belgium during the last two years, it is in line with the Eurozone average.

Macroeconomic factors, such as lower interest rates and income support during the pandemic can partly explain the strong growth figures. We also note that the preference of Belgians seems to have changed in the last two years.

Additionally, the so-called FOMO effect (Fear Of Missing Out) probably also played a role in the strong price growth. As Belgians saw prices grow quickly, they may have wanted to act fast or risk paying even higher prices in the future. This mechanism also puts upward pressure on prices.