Belgium's housing market experienced a 4.2% decline in the number of homes and apartments sold during the first half of this year.
This dip can be attributed to inflation and higher mortgage loan prices, which have had a noticeable impact. As a consequence, the average price of a home fell by 0.3% for the first time in years. However, there are recent signs of improvement.
Those who purchased a home in the first half of this year may have made a wise investment, benefiting from the market conditions. Conversely, it has been a challenging period for sellers. According to the Notary Barometer, the average price of a home dropped by 0.3%, settling at €320,397.
Bart Van Opstal, spokesperson for the Federation of Notaries, highlights the significance of this decline, given the consistent rise in house prices over the past years. In comparison, the average price of a house in Belgium was €253,608 in 2018.
The decrease in house prices can largely be attributed to the significant increase in mortgage loan costs, with interest rates rising by an average of 2% in just one year. At present, the figure for a fixed-rate loan over 25 years stands at around 3.5%, as reported by Immotheker Finotheker. In response to inflation, the European Central Bank was compelled to raise interest rates, with the aim of cooling down the housing market.
Despite the price drop, the decline in the average home value remains relatively limited, particularly when compared to countries like Germany, where prices dropped by an average of 6.8% in the first quarter. This resilience is partly due to Belgium's high number of private homeowners, with 70% of the population owning their homes, providing more stability to the housing market.
Flanders sees biggest drop
Regional differences play a role in the real estate market's performance. Overall, real estate activity suffered a significant blow, with 4.2% fewer transactions recorded in the first half of this year compared to the same period in 2022.
However, this decrease was more pronounced in January and February, when the market saw a decline of more than 10%. The situation fluctuated in the following months, and June experienced a remarkable increase in real estate activity, rising by 5.5%. The extent of this revival will be closely observed in the upcoming months.
When analysing different regions, notable disparities emerge, with Flanders experiencing a 5.9% drop, Brussels a 3.7% decline, and Wallonia a 1.1% decrease in real estate activity. The trend observed throughout all regions was a sluggish market at the beginning of the year, followed by improvement in the second quarter, with June standing out as a particularly active month.
The impact of more expensive loans is especially felt among young buyers, who have had limited time to save substantial amounts of money. Consequently, the share of buyers under the age of thirty fell by 20% in the first six months of 2023, compared to the previous year, accounting for 27.3% of total buyers.
On the other hand, older individuals, mainly over-fifties, recorded a larger share of real estate transactions, as they can finance a more significant portion of their homes independently.
