Results from a 2017 European survey on the real estate market could help analyse the potential effects of the new coronavirus crisis, the National Bank of Belgium (NBB) said on Monday.
The survey showed that, despite the economic recovery and the fall in interest rates in 2017, most Belgians did not turn to riskier and more sophisticated financial assets, such as shares, bonds and savings bonds, preferring deposits and supplementary pension plans or life insurance policies.
Compared to the previous survey (2004), Belgian households took on more debt, particularly in the form of mortgages, which increased by 22%. “Households borrowed more in relation to the value of their assets and in relation to their income, which could increase their vulnerability to a negative shock affecting their finances”, the NBB noted.
“While the aggregate values were not excessive, a high level of debt could nevertheless become problematic for some households,” the National Bank continued: the survey showed a growing proportion of cases in which debt is very high in relation to the gross annual household income (more than 300%) or total assets (more than 75%).
The rise in debt levels, also in relation to total assets, means that the net wealth of Belgian households fell between 2014 and 2017. According to the NBB, that decline was more marked for younger households and the poorest.
The information from the survey can be useful “for identifying potential vulnerabilities among households, particularly in the face of a shock to their income or the value of their assets, including taking account of their debt levels,” the NBB concluded.
The next two waves of the survey will be carried out in 2020 and 2023.
The Brussels Times