Market in Depth

Belgian house prices continue to rise, despite falling demand and weak economy

January 01, 2018

Falling demand, a weak economy, bubble warnings - Belgium has it all. And yet house prices continue to rise, albeit modestly, which might be due to the fact that housing supply is declining again.

During the year to Q3 2017, the nationwide average price of regular houses in Belgium rose by 3.45% (1.54% inflation-adjusted) to €224,857 (US$269,392), according to the Statistics Belgium.  There was even a spike in prices during the year, with annual house price rises of 6.27% in Q2 2017, 6.81% in Q1 2017, 5.69% in Q4 2016, but only 2.23% in Q3 2016.

Villa prices increased 3.99% (2.07% inflation-adjusted) y-o-y in Q3 2017. Apartment prices rose by 5.97% (4.01% inflation-adjusted) during the year to Q3 2017, the biggest increase since Q4 2015.

During the latest quarter, regular house prices rose by 1.3% q-o-q in Q3 2017 (1.1% inflation-adjusted), while apartment prices increased 3.3% q-o-q in Q3 2017 (3.1% inflation-adjusted).

In Q3 2017:
  • In Brussels-Capital region, house prices rose by 3.47% y-o-y (1.56% inflation-adjusted) to an average of €429,627 (US$514,719). During the latest quarter, house prices increased 5.1% (4.9% inflation-adjusted).
  • In the Flemish region (Flanders), prices of houses increased 1.71% y-o-y (-0.18% inflation-adjusted) to an average of €236,189 (US$282,969). Quarter-on-quarter, house prices rose by 1.5% (1.3% inflation-adjusted).
  • In the Walloon region (Wallonia), house prices rose by a meager 0.1% (-1.75% inflation-adjusted) to an average of €163,348 (US$195,700). Quarter-on-quarter, house prices rose by 2.8% (2.7% inflation-adjusted).

Demand is now falling
Total regular house transaction numbers fell by 7.6% during the first three quarters of 2017, according to Statistics Belgium, while transactions by value fell 2.6%.

Residential construction is declining. During the first seven months of 2017, the number of dwelling permits fell by a huge 17% y-o-y to 28,231, and residential building permits issued also declined by 19.7% to 12,104 over the same period, according to the National Bank of Belgium (NBB).

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. The Belgian economy continues to disappoint. Then 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 in the whole country have risen only marginally since then, by 1.12% in 2012, 1.13% in 2013, 0.96% in 2014, 1.52% in 2015 and 2.5% in 2016.

Belgium annual house price change graphIn 2016, the economy grew by just 1.2%, a slowdown from 1.5% in 2015 and 1.6% in 2014. The economy is projected to expand by 1.7% this year and by 1.8% in 2018, according to the European Commission.

There are no foreign ownership restrictions in acquiring Belgian property.

Analysis of Belgium Residential Property Market »

Rental Yields

Yields in Brussels moderate, but yields on houses improve

Gross rental yields in Brussels range have remained steady over the past year. Gross rental on apartments in Brussels range from around 4.56% to 5.53%, while yields on houses range from 4.46% to 5.01%. Meanwhile, the difference between the yields on small properties, which tends to be higher, and those on larger properties, has shrunk.

Square metre (sq. m.) prices of apartments and houses in the prime districts of Brussels have been increasing, according to the latest survey of Global Property Guide. 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 Laeken, Nieder-over-Heembeck, Auderghem, Ixelles, St. Gilles, Uccle, Woluwe-St. Pierre, and Woluwe-St. Pierre. Our survey included around 2,300 apartments and houses.

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 disappointing

BelgiumIn Q3 2017, economic growth stood at 1.7%, slightly up from the previous quarter’s 1.5% growth, but lower than the EU-28’s average growth of 2.6% in Q3 2017. The Belgian economy grew by just 1.2% in 2016, after growth of 1.5% in 2015 and 1.6% in 2014, according to the NBB.

The economy is projected to expand by 1.7% this year and by 1.8% in 2018, according to the European Commission.

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 0.7% in 2008, -2.3% in 2009, 2.7% in 2010, 1.8% in 2011, 0.2% in 2012, and -0.1% in 2013, mainly due to the adverse impact of the eurozone debt crisis, according to Belgostat.

In October 2017, the country’s seasonally adjusted unemployment rate was 6.9%, down from 7.2% the previous year, according to the NBB.

Inflation was around 2.1% in December 2017, slightly up from 2% a year earlier, based on the figures from the NBB.

Belgium’s budget deficit was 2.6% of GDP in 2016. The deficit is expected to decline to 1.5% of GDP this year, according to the European Commission.

Belgium’s gross national debt was equivalent to about 107% of GDP in 2016, the highest level since 2002. The public debt is expected to fall to 103.8% of GDP this year.

Terror attacks
Earlier last year, Belgium was shocked by terrorist attacks in Brussels. In March 22, 2016, three coordinated nail bombings were reported, two at Brussels Airport in Zaventem and another at the Maalbeek metro station. 32 victims were killed plus 3 suicide bombers, as well as around 300 people injured.

The act of terrorism, the deadliest in Belgium’s history, was claimed by the Islamic State of Iraq and the Levant (ISIL). To avoid any similar incident in the future, Belgian authorities have been conducting massive anti-terrorists raids in recent months, particularly in and around Brussel’s Molenbeek district, which was dubbed as Europe’s jihadi capital.

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