House prices in Belgium increased over the first nine months of this year, as rising mortgage rates largely failed to suppress demand in the country's real estate market.
The average price of a home purchased over the first nine months of this year was €321,993: a 0.9% increase compared to the same period last year.
According to figures published by l'Echo, house prices were also found to have risen in real terms (i.e. once inflation is taken into account). In particular, with annual inflation in Belgium currently estimated at just 0.7% – the lowest rate in the eurozone apart from the Netherlands – real house prices are thus estimated to have grown by 0.2%.
The overall price increase is especially unexpected since analysts had previously forecast that rising mortgage rates would cause the real estate market to cool this year. It is also surprising given that, if one compares just the first six months of this year to the same period in 2022, house prices actually fell.
Brussels: Still so unique
The report found that the Brussels real estate market remains at outlier compared to the rest of Belgium, with house prices in the Belgian capital having decreased in both nominal and real terms.
In particular, Brussels house prices fell by 3.6% over the first nine months of this year (or 4.3% in real terms). By contrast, prices rose by 1.1% in Wallonia (or 0.4% in real terms) and by 2.3% in Flanders (or 1.6% in real terms) over the same period.
Despite the decline in house prices in Brussels – as well as corresponding price increases in Wallonia and Flanders – homes in the capital remain significantly more expensive relative to the rest of the country. The current average price of a house in Brussels is €556,081, compared to €238,104 in Wallonia and €355,941 in Flanders.
An 'uncertain' market
Experts also noted that, in spite of the overall increase in prices, the number of real estate transactions fell by 3.1% across the country over the noted period.
Speaking to l'Echo, real estate notary Renaud Grégoire suggested that a key reason for the decline in market activity is uncertainty over possible future interest rate hikes by the European Central Bank (ECB).
The ECB has raised interest rates on ten consecutive occasions over the past year, bringing its benchmark deposit facility rate to an all-time high of 4.0%. However, ECB President Christine Lagarde has steadfastly refused to offer any indication as to whether the bank will increase rates at its next meeting later this month.
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"The market has been stabilising for several months now," Grégoire said. "The number of transactions decreases and the goods sell noticeably less quickly. The uncertainty that hovers around interest rates is certainly the main cause of this cooling of the market."
Grégoire also suggested that the main reason why average prices have not decreased is because of Belgium's relatively high rate of home ownership. "Prices are not falling, because the market is supported by a high rate of ownership in Belgium, which allows it to be stable," he said.
71.3% of Belgians own their home: a higher proportion than all neighbouring countries including Luxembourg (71.1%), the Netherlands (70.1%), France (64.7%), and Germany (49.5%).
