Surprisingly, Belgian house prices continue to rise, despite falling property transactions due to the abolition of “woonbonus” in Flanders coupled with the adverse impact of the COVID-19 pandemic.

During 2020, the nationwide house price index in Belgium rose by 5.74% (5.16% inflation-adjusted), the highest y-o-y rise since 2007, according to Statistics Belgium. Quarter-on-quarter, the overall index increased 2.2% in Q4 2020 (2.33% inflation-adjusted).

Existing dwelling prices rose strongly by 7.38% y-o-y in 2020 (6.78% inflation-adjusted). New dwelling prices rose by 5.21% (4.62% inflation-adjusted).During 2020, the total number of residential property transactions in Belgium fell by about 18% y-o-y to 122,435 units, mainly due to the abolition in Flanders of the “woonbonus” rules last year (a system of tax deductions for people with a mortgage), aggravated by the adverse impact of the pandemic. The sharp decline in transactions last year was in stark contrast to the y-o-y rises of 14.8% in 2019, 5.2% in 2018, 4% in 2017 and 15% in 2016. 

Residential construction activity remains more or less steady. In 2020, new residential building permits authorized in Belgium rose by 4.4% y-o-y to 28,645, 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). After then house prices rose slowly, by an annual average of just 1.2% in 2012-2015. Since then the pace has quickened. House prices rose by 2.54% in 2016, 3.55% in 2017, 2.52% in 2018, and 4.78% in 2019, on the back of improved economic growth. 

House prices are expected to rise strongly this year (2021-2022). 

In Q1 2021, the Belgian economy shrunk slightly by 0.6% from a year earlier, its fifth consecutive quarter of y-o-y declines amidst the coronavirus crisis. The economy is expected to return to growth this year, with a projected real GDP growth rate of 4.5%, following a contraction of 6.3% last year, according to the European Commission.

There are no foreign ownership restrictions in acquiring Belgian property.

Regional house price variations

Belgium is divided into three regions:

the Flemish Region that occupies the northern half with Dutch-speaking communities;

the Walloon Region which occupies the southern-half and is made-up largely of French-speaking communities, with a small German-speaking community in the south-east; and

Brussels, the administrative capital region, an officially tri-lingual city inside the Flemish region.

Each region and community has a separate parliament and executive administration, with power increasingly devolved. There is persisting ethnic conflict, and the political union has come under rising threat.

Property prices in Belgium’s three regions move in the same price cycle, but the capital has registered much the highest price increases. Prices in Brussels surged almost 200% (140% in real terms) from 1998 to 2008, much more than in the two other regions (143% for the Flemish region and 116% in Walloon), according to Statistics Belgium.

The drivers of Belgium’s house price boom were:

rapid mortgage market expansion, due to low interest rates and increased competition between banks; and economic and wage growth.

When these conditions were reversed with the global credit crunch, house price rises slowed sharply. From 2009 to 2019, house prices in Brussels increased by only 28% (7% in real terms).

In the Flemish and Walloon regions, prices rose in 2009-2019 by 37% (15% in real terms) and 27% (6% in real terms), respectively.

Surprisingly house price growth has noticeably strengthened last year despite the pandemic. 

During 2020:

In Brussels-Capital region, the median price of closed or semi-closed type houses rose by 8.8% y-o-y to €435,000 (US$526,739) and by 11% y-o-y to €960,000 (US$1.16 million) for open type houses. Apartment prices also increased strongly by 8.6% to €228,000 (US$276,084).

In the Flemish region (Flanders), the median prices of closed/semi-closed, and open type houses rose by 3.8% to €249,000 (US$301,513) and by 5.8% to €349,000 (US$422,602), respectively. Apartment prices increased 7.7% y-o-y to €210,000 (US$254,288) last year.

In the Walloon region (Wallonia), closed/semi-closed house prices rose by 4.7% y-o-y in 2020 to €155,000 (US$187,689) while open type house prices were up 5.8% to €254,000 (US$307,568). The median price of apartments rose by 4.7% y-o-y to €155,000 (US$187,689).

Belgian house prices. These figures are derived from the European Central Bank, and stretch back to 1990. Statistics Belgium releases rich data on four different categories of dwelling and land prices, stretching back to 1985. Stadim also publishes annual indices starting in 1960Description text goes here

The house price to income ratio is the ratio of the cost of a typical upscale housing unit of 100 square metres, compared to the countrys GDP per capita. Normally this ratio will be much higher in low income countries than in high income countries. The formula is: (Price per square metre / GDP per capita)*100. The house price to income ratios published by the Global Property Guide are based on the Global Property Guides own proprietary in-house research, but we use the IMFs GDP per capita figures.

This ratio is typically used for measuring undervaluation/overvaluation of real estate prices, calculated by dividing the gross rental yield by 100 so the higher the yield, the lower the price/rent ratio.