Belgium Real Estate Market: Rising Prices and Rent Surge

Explore how the unaffordable Belgium real estate market is driving up rental prices, impacting residents and shaping the housing landscape.

Real estate in Belgium, often perceived as a hidden gem in the heart of Europe, boasts prices that are comparatively lower than those in its neighboring countries. However, this affordability is a double-edged sword, as the market has witnessed a notable surge in newly constructed properties. Yet, the dream of homeownership is becoming increasingly elusive, compelling many to pivot towards the rental market, thereby perpetuating what can only be described as "a cycle of unaffordable housing."

When juxtaposed with the real estate markets of France, Germany, and the Netherlands, acquiring a home in Belgium remains a more financially palatable endeavor, particularly for both older and newly built properties. Nevertheless, the relentless ascent of property prices, even in the face of rising interest rates, continues to exert significant pressure on the purchasing power of the populace. The 13th edition of the Deloitte Property Index poignantly observes, "These properties are increasingly becoming accessible only to the upper-middle class of the population." Newly constructed assets have experienced a price increase of 3.4%, with major urban centers witnessing an even steeper rise, approaching 10%. The market for existing and aging properties is similarly under duress.

The demand for smaller living spaces, such as apartments, is being propelled by socio-demographic shifts, including a decrease in average household size, which in turn is driving up rental prices. Compounding this issue is the regulatory framework surrounding building energy efficiency. The necessity of obtaining an Energy Performance Certificate (EPC) not only incurs substantial renovation costs for older properties but also exacerbates the disparity between energy-intensive older homes and their energy-efficient counterparts.

Experts contend that the confluence of escalating borrowing costs—rendering mortgages less attainable for many prospective buyers—and surging property prices has significantly deteriorated housing affordability in Belgium. This unfortunate trend has led to a marked decline in demand for home purchases, particularly among first-time buyers. As homeownership slips further out of reach, the demand for rental properties has surged. However, the rental market is grappling with a constrained supply, a situation exacerbated by the slowdown in built-to-rent project volumes, which saw a staggering 30% decrease in transactions from 2022 to 2023.

Despite Belgium experiencing one of the most robust growth rates in new home construction per capita across Europe—an impressive 14.3% last year—this surge has proven insufficient to bridge the widening gap between supply and demand. Experts have noted that this imbalance is driving rental prices ever higher. A recent analysis by the Confederation of Real Estate Professionals (CIB) revealed that individuals entering rental agreements in 2023 are shelling out an average of €1,249 per month—nearly €100 more than in the previous year. Deloitte further highlighted that the uptick in rental prices has outpaced that of the acquisition market, with the most significant increases occurring in major cities, particularly Brussels and Antwerp. In fact, Brussels stands out as the sole region where rent hikes (approximately 8.6%) have eclipsed inflation, with average monthly rents now exceeding €1,200 for apartments, around €800 for studios, and approximately €1,850 for semi-detached houses.

As it stands, housing affordability in Belgium remains relatively stable. Last year, a Belgian household needed to allocate an average of 7.9 gross annual salaries to purchase a new 70 m² home, positioning Belgium squarely in the middle of the European spectrum. This suggests that homeownership in Belgium is reasonably attainable compared to other nations, such as the Netherlands and Czechia, where individuals must save 15.1 and 13.3 annual salaries, respectively, to secure a comparable residence. However, the specter of housing affordability looms larger than ever, particularly in Brussels, where nearly 40% of the population faces the threat of poverty or social exclusion, and over 60,000 households languish on waiting lists for social or affordable housing.

The persistent rise in purchasing prices, coupled with the supply-demand conundrum in the rental market, is undeniably fostering "a cycle of unaffordable housing." It is imperative that the various Belgian governments adopt innovative strategies to address this looming housing crisis in the years to come.