Over the past two years, Belgium has been facing a housing crisis. The European Union’s capital faces a shortage of affordable housing. The number of homeowners also decreases. According to reports, there is a lack of social housing and a general shortage of affordable housing for weak societies. A small number of families own houses, and the majority labour to pay increasing rents. Moreover, high interest rates are the primary obstacle for people to get a mortgage. Higher prices and more expensive financing have decreased the production of new houses.
According to Statistics Belgium, the demand for residential property dropped rapidly in 2023. In the first three quarters, the total number of residential property transactions in Belgium decreased by a massive 17.5%. However, there were increases of 5.1% in 2022 and 17% in 2021. Belgium’s three regions witnessed a drop in residential property transactions in Q1-Q3 2023. Belgium’s housing market remained robust in the years, despite the COVID-19 pandemic. Based on statistics, House prices increased by 5.7% in 2020, by 6% in 2021, and by another 4.8% in 2022. However, the housing market began to stall last year.
As reported by VRT, 14 experts from the social housing, property, building and rental sectors in Belgium have issued an open letter in May 2024. They warn policymakers that a housing crisis is dominating. They said it would make it unattainable for average residents to purchase a home. Based on their joint statement they express a crisis that will witness fewer and fewer families holding a home and labouring to pay increasing rental costs.
The published letter states: “In Belgium, around 75% of people possess a home, 20% are renting and 5% residence in social housing, But the first category is in downfall… Individuals who are renting in the private rental market are confronting growing problems in terms of quality and affordability.”
Experts stated that Belgium’s capacity to provide new housing is shrinking even as the demand overshadows the supply. Slow methods for building permits and rules that are not adjusted to the current society are leading to the problem. “Interest rates are increasing, and it’s getting more challenging to get a mortgage,” stated Van Tornhaut, a real estate developer. “And there are systematically fewer homes being backed and built every year. Everyone who marked this letter is conscious that this situation is not likely to reverse anytime soon. There is tension in every subsector of housing.”
According to the experts, inexpensive housing will be something of history within three years if the effort is not made now. “Those in the most weak situation are renters, who usually earn less than homeowners,” stated Van Tornhaut. “They are the first to handle the pressure.” It’s the custom in Belgium, to purchase a house if you have satisfactory earnings. However, the number of owners is decreasing. They contended that there is no like-mindedness in housing guidelines. There is little talk between municipalities, even though the relationship between the cities and surrounding towns is required.
Besides the housing crisis, the rental market is also facing an acute shortage of available properties. In Brussels and Flanders, a decline in new rental agreements is leading to expanded competition and, increased rents. As reported by the expat management group, new rental contracts decreased by 20% in Brussels, in 2024. However, the demand remains high in Brussels. This shortage is caused by increasing interest rates, labour shortages, construction costs and more stringent energy efficiency standards (PEB). These all factors have postponed or cancelled many new schemes. Rents increased by 2.8% in the first half of 2024 where around 90% of Brussels’ rental market consists of apartments.
The Federation of French-speaking Real Estate Agents of Belgium (Federia) cautions that unless guidelines shift to boost private investment, the housing shortage will deteriorate. It will push rents even more increased.
According to the CIB rental barometer, regarding Flanders, the rental market has witnessed a 30% decrease in contracts during the first half of 2024. The market is overwhelmed. Around 40-50 potential renters contend for each property and some listings acquire up to 90 inquiries.
Residents have few options, especially for properties in the €700-850 price range. Rents are increasing only with inflation, despite high demand. The average rents now surpass €850 per month. The situation is aggravated by higher interest rates. It keeps residents in their current homes. The investors exited the market due to renovation expenses.
