Brussels (Brussels Morning) – After a short course of stabilisation and even a slight decline in property prices, the cost of purchasing a house or flat is once again at its height. Coupled with a break in interest rates, it is putting stress on purchasing power.
High mortgage rates and a troubling economic situation stopped buyers’ appetites last year, resulting in real estate dealings falling across Belgium. It was anticipated this would spur a drop in prices. While Brussels witnessed a slight fall in house prices, most property prices continued to rise.
Now, it seems any expectancy of a further decrease is dashed as property costs across the country continued to increase in the second quarter (+1.3%), verifying the upward trend of the first quarter (+1.1%), real estate forum Immoweb confirmed.
Why did property prices rise despite economic uncertainties?
“This cost rise can be explained by the fall in interest rates in late 2023,” stated Immoweb Managing Director Piet Derriks. After peaking at 3.9% in January after two years of sharp gains, interest rates began to fall, stabilising at around 3.4% in the previous quarter. “This led to a recovery in buying power and consequently boosted the market at the beginning of the year.” Immoweb also reported a significant reduction in the stock of homes for sale on the market between January and April which forced up prices. However, this rise is still below the level witnessed in the first half of 2020 to 2022, when average expenses increased by 3.3%.
Is Brussels’ real estate market recovering from previous setbacks?
The national average cost per square metre (m²) now poses at €2,313. The recorded cost growth was most powerful in Wallonia (+1.6%) when it came to buying property. The average price per m² in Belgium’s most affordable region is now €1,729. The Brussels market is also reaping up (+1.4%), after long trailing behind the other areas in price increases. The average price per m² is €3,320. The biggest growth was recorded in the price of houses (+2.1%) after the price decline in 2023.
Flanders, which is the second most costly region after Brussels, saw the most modest growth (+1.1%), bringing the average cost to €2,458. More locally, Walloon Brabant and Charleroi recorded the biggest growth in Wallonia (both +2.1% in the second quarter). In distinction, the cities of Liège and Namur revealed a slight decrease (-0.3% and -0.4%, respectively). In Flanders, Mechelen registered the biggest increase (+2.1%), while property costs in Ghent dropped by 2.1%.
How is household purchasing power affected by rising property costs?
When interest rates began to fall at the end of December 2023, this initially led to an expansion in household purchasing power of 3 m² on average between December 2023 and April 2024.
However, the dynamic of rising prices combined with the stabilisation of interest rates this quarter “put a brake on the expansion in purchasing power” observed at the start of the year.
In June, purchasing strength even fell by 1 m², however, this figure is still more elevated than at the same time last year (107 m² compared to 106 m²).
“This situation can be described by the fact that the fall in interest rates at the start of the year did not continue in the second quarter, although the peak in prices persisted,” added Immoweb real estate economist Jonathan Frisch. He stated that the European Central Bank’s future findings on interest rates will have a “major influence on the future course of borrowing prices and thus on price trends and household purchasing power.”
