Market in Depth

Belgium's housing market remains vibrant

Lalaine C. Delmendo | January 02, 2020

The Belgian housing market is felt by many analysts to be overvalued. But Belgium's house prices continue to rise, amidst strong demand and slowing residential construction activity.

During the year to Q3 2019, the nationwide house price index in Belgium rose by 3.93% (2.73% inflation-adjusted), after rising 2.54% in the equivalent period last year, according to the Statistics Belgium. Quarter-on-quarter, the index increased 2.92% in Q3 2019 (3.03% inflation-adjusted).

Existing dwelling prices increased 4.37% y-o-y in Q3 2019 (3.17% inflation-adjusted). New dwelling prices rose by 2.09% over the same period (0.92% inflation-adjusted).

Belgium's housing market remains vibrant. The number of transactions for houses rose by 3.6% y-o-y during the first three quarters of 2019, according to Statistics Belgium. Likewise, apartment transactions increased 8.5% over the same period.

Despite rising demand, residential construction activity is slowing in Belgium. During the first eight months of 2019, the number of dwelling permits fell by almost 19% y-o-y to 36,126, and residential building permits issued also declined by 10.5% to 18,157, according to Statistics Belgium.

During Belgium's housing boom (2000-Q3 2008), nationwide house prices soared by 129% (86% inflation-adjusted). Since the crisis, house prices have followed the economy. When the economy was strong, house prices rose. When the economy was weak, house prices stagnated.

When the economy emerged from recession in 2011, the housing market bounced back strongly with Brussels house prices surging by 9.58% (5.7% inflation-adjusted). House prices rose slowly post-recession, by 1.12% in 2012, 1.13% in 2013, 0.96% in 2014, and 1.52% in 2015.

Since then the pace has quickened. House prices rose by 2.54% in 2016, 3.55% in 2017, and 2.52% in 2018, amidst improved economic growth.

Belgian house prices are projected to rise by about 3.2% in 2019 and by another 2% in 2020, according to ING Bank.

Belgium annual house price change graph
However in 2019, the Belgian economy was estimated to have expanded by only 1.3%, the lowest growth since 2013, based on the latest projections released by the National Bank of Belgium (NBB). The European Commission is even more pessimistic, projecting a minuscule real GDP growth of 1.1% for the country in 2019, amidst a slowing global economy. But this remains at par with Belgium's average economic growth of 1% annually from 2008 to 2018.

There are no foreign ownership restrictions in acquiring Belgian property.

Analysis of Belgium Residential Property Market »

Rental Yields

Yields in Brussels moderate

Gross rental yields in Brussels range have remained steady over the past year. Gross rental yields on apartments in Brussels range from around 4.56% to 4.76%. Meanwhile, the difference between the yields on small properties, which tends to be higher, and those on larger properties, has shrunk.

The price of apartments and house in Belgium have been rising, according to the consultancy Stadim. So too have rents.

All of the apartments and houses included in our survey are located in the prime areas of Brussels. The prime areas we took were Brussels City, Etterbeek, Ixelles, St. Gilles, Uccle, Woluwe-St. Pierre, and Woluwe-St. Lambert.

The biggest reason that investors in Belgium will be discouraged is that round trip transaction costs are high for buyers of residential property. See our Belgium residential property transaction costs analysis and our Residential property transaction costs in Belgium compared to other countries

Read Rental Yields »

Taxes and Costs

Moderate to high
effective income taxes in Belgium

Rental Income: Personal income tax range from 25% to 50%, depending on the taxable net income. The taxable net income is the cadastral value, increased by 40%, minus deductible expenses. As a result, the effective rental income tax is a bit lower than the headline rate, ranging from 9.22% to 23.07%.

Capital Gains: Capital gains tax of 16.5% is payable on gains on developed property held for less than five years. After a holding period of five years, no Capital Gains Tax is payable.

Inheritance: Inheritance tax rates in Belgium are progressive and vary according to the degree of kinship, region where the inheritance is opened, and the share inherited by each of the heirs.

Residents: Residents are taxed on worldwide income at progressive rates, from 25% to 50%.

Read Taxes and Costs »

Buying Guide

Total transaction costs are high in Belgium

Closing costs are high in Belgium, between 14.60% and 27.60% of property value. The bulk of the cost is accounted for by transfer duties at 10% or 12.5%, depending on the property�s location. Roundtrip costs for new properties are much higher because of the 21% VAT.

Read Buying Guide »

Landlord and Tenant

Tenant protection laws are well-established in Belgium

Belgian law is pro-tenant.

Rents: Rents can be freely negotiated but rent increases above the inflation rate cannot be written into the contract. If there is a written contract, the rent will be automatically adapted once a year in accordance with the cost of living. Deposit payments must not exceed three month�s rent.

Tenant Security: Belgium�s landlord and tenant law is restrictive as regards the length of rental contracts. The main options for the duration of a lease are: a contract of 9 years and, alternatively, a contract for less than three years.

Read Landlord and Tenant »


Economic growth continues to disappoint

The Belgian economy was estimated to have expanded by 1.3% in 2019, the lowest growth since 2013, based on the latest projections released by the National Bank of Belgium (NBB). The European Commission is even more pessimistic, projecting a miniscule real GDP growth of 1.1% for the country in 2019, amidst slowing global economy. This was at par with Belgium’s average economic growth of 1% annually from 2008 to 2018.

“The growth of the global economy is declining, that of the eurozone is not doing well, and the outlook is clouded by the Brexit and the trade dispute between China and the United States,” said the Institute of Economic and Social Research (IRES) of UCLouvain. “Consumer confidence in Belgian companies has also deteriorated sharply since the beginning of the year.”

From 1997 to 2007, the country enjoyed healthy economic growth of about 2.5% per year. But since the crisis, growth has been weak. GDP growth was 0.4% in 2008, -2% in 2009, 2.9% in 2010, 1.7% in 2011, 0.7% in 2012, and 0.5% in 2013, mainly due to the adverse impact of the eurozone debt crisis, according to the NBB.

In October 2019, the country’s seasonally adjusted unemployment rate was 5.6%, down from 5.8% in the previous year, according to the NBB.

Inflation slowed to just 0.8% in December 2019, down from 2.3% a year earlier, based on the figures from Statistics Belgium.

Belgium’s budget deficit stood at 0.7% of GDP in 2018 – a slight improvement from the previous year’s shortfall of 0.8% and the country’s best showing since posting a surplus of 0.1% of GDP in 2007. The deficit is expected to rise again to 1.7% of GDP this year and to 2.3% in 2020, according to the European Commission.

The country’s gross national debt was estimated to be equivalent to 99.5% of GDP in 2019, slightly down from 100% in 2018 and the lowest level in a decade.

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