House prices across Belgium are expected to decline over the next few months, as rising mortgage rates suppress demand in the country's real estate sector.
"Owners are starting to accept a drop in prices," Amaury Hermanns, Director of the Etterbeek-based Hermanns Real Estate agency, told La Dernière Heure. "We expect to see a decrease of 5%."
Hermanns' prediction is corroborated by a report published last month by ING Belgium, which estimated that real estate prices will fall by 3% over the second half of this year. It also forecast that prices will only "recover cautiously" in 2024.
The expected markdown follows a 0.3% reduction in average house prices over the first six months of 2023: the first decrease in five years. Among Belgium's three Regions, Brussels experienced the greatest decline (-4.1%) by far.
'This is only the beginning'
In addition to the overall drop in prices, the total number of home purchases has fallen steeply in recent months. Over the first half of 2023, sales decreased by 4.2% across Belgium, with Brussels (-3.7%) and Flanders (-5.9%) experiencing far greater declines than Wallonia (-1.1%).
Speaking to Le Vif, Étienne de Callataÿ of Orcadia Asset Management argued that rising mortgage rates are largely to blame for the downswing in both sales and prices. "The rise in interest rates is indeed the main factor in this decrease in real estate loans," de Callataÿ said.
"The very violent rise in rates therefore has a colossal impact. At first, it is not reflected on the sale price. But it is difficult to imagine that the interest rate rises so sharply without the price of real estate falling."
Hermanns also noted that declining home purchases have led to an "explosion" in demand for rented accommodation. "This [decline] translates into a very strong increase in demand on the rental market".
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According to a study published this month by the Federation of Francophone Real Estate Agents (Federia), the average cost of rental property in Belgium rose by 3.3% (or €38 more per month) over the first half of this year. Federia also forecast that rental prices will continue to increase until at least the end of 2023.
"This is only the beginning," said Federia's Managing Director Charlotte De Thay. "Initial figures for the second half of the year indicate that the increase is continuing and even accelerating."
Despite the recent (and forecast) markdowns, house prices in Belgium remain extremely high by historical standards. The current average house price in Belgium is €320,937, up from €253,608 in 2018.
House prices in Brussels also remain elevated relative to the rest of Belgium. The average cost of a home in the Belgian capital is €536,712, compared to €356,863 in Flanders and €236,148 in Wallonia.
