Brussels (Brussels Morning) – The National Bank urges increased housing supply, citing rising purchasing power and difficult housing access. Governor Wunsch emphasizes policy influence. The housing market underperforms due to costly materials, and higher mortgage rates. Recovery is expected by 2026.
The National Bank makes a plea for more homes in the country. “Our purchasing power continues to rise, but people do not have that feeling, because access to housing has become much more difficult,” stated Governor Pierre Wunsch.
Why is Belgium’s Housing Market Struggling to Recover?
Wunsch stated, during the presentation of the National Bank’s half-year outlook, that he regrets that the issue is barely discussed in the election discourse, “while it is pre-eminently a theme on which policy can exert influence.”
The Belgian housing market is doing less well than expected. In its forecasts, the National Bank assumed a slow recovery in housing investments, but the trend is still worsening. “For three quarters in a row we saw a decline of 2 to 3 per cent, which is significant,” said chief economist Geert Langenus. The explanation is given to the more expensive building materials and increased mortgage interest rates.
The National Bank now only expects a real recovery in housing investments in 2026. “And that is a shame because there is a great need for housing. After all, affordability is under pressure and the number of families will increase in the coming years,” it said.
How Can Policy Changes Boost Belgium’s Housing Market?
The National Bank argued for increasing the supply of housing. “Through more social housing, or by adjusting regulations,” Langenus illustrated. “The decline in the number of building permits is indeed because the policy has become stricter.”
As far as the renovation obligation is concerned, feedback was provided in the annual report, where the National Bank had already made a plea to focus on the objectives. Instead of expensive insulation, one can, for example, opt for solar panels and a heat pump to achieve the climate target, it was said at the time.
The governor, just back from the ECB policy meeting in Frankfurt, referred to house prices there. “A house costs 15,000 euros per square meter, which is much more than the construction cost and proves that this is the result of a policy (…) We need a debate about this.”
Can Government Actions Alleviate Belgium’s Housing Challenges?
The expectations for the Belgian economy contain few surprises and are in line with previous forecasts, was the message from the National Bank in its new spring estimates. For example, gross domestic product (GDP) would continue to grow consistently at 0.3 per cent per quarter in 2024 and 2025, as in previous quarters. On an annual basis, this is a growth of 1.2 per cent. Acceleration is not expected until 2026, with a growth of 1.4 per cent.
The National Bank has noticed that business investments are moderating and government investments (traditionally after elections) are declining sharply. Net exports would then gradually make a less negative contribution.
Household consumption growth, which was still very volatile in previous years, is now expected to remain relatively stable (at the long-term average of +0.4 per cent), mainly thanks to a slight decline in the savings rate in the following years. “But with a savings rate of 14.2 per cent in 2026, it is still higher than before Corona,” noted chief economist Geert Langenus
