The new home construction and residential renovation sector in Belgium is in "dire straits," according to a press release by the construction federation Embuild on Monday.
Embuild brings together more than 16,000 Belgian small to large companies, as well as freelancers, in the sector. The federation's conclusion was drawn from the results of an economic survey it conducted which included 427 construction and installation companies and revealed some shocking premonitions for the industry in 2024.
After an already difficult year, 63% of residential construction companies and 46% of residential renovation companies expect 2024 to be even harder due to falling investment, activity and profitability.
The mortgage interest rates that have tripled over the last year (from 1% to 3.5%) and brought the residential market to a standstill are no less to blame, as well as the fact that it is increasingly expensive for families to build or renovate. Almost all construction and installation companies reported that their customers find it hard to borrow money for their projects in the survey.
'Explosive cocktail'
"The explosive cocktail of rising mortgage rates, material prices and personnel costs has hit consumers hard," Niko Demeester, CEO of Embuild, wrote in the press release. "While we await a new price equilibrium in the residential market, we must avoid any further increase in costs for private individuals," Demeester added.
In August, architects flagged a declining demand for both renovations and construction of new houses and apartments, with the Flemish Architects Organisation (NAV) and L'Union Wallonne des Architectes (UWA) reporting that almost half of all architects reported a drop in demand in the first six months of the year.
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Demeester also strongly urged the extension of the VAT reduction (from 21% to 6% since 2021) on demolition-reconstruction. In fact, he would like to see the 6% VAT reduction, which also applies to installing solar panels, solar water heaters and heat pumps in homes, become permanent.
"We therefore welcome the Prime Minister's party's call for this measure to be permanently enshrined in the federal budget conclave."
Still profitable for consumers
Demeester also appealed directly to consumers: "Objectively speaking, it is still profitable for consumers to carry out their construction or renovation project. Thanks to wage indexation, Belgians' purchasing power has not been affected," he reminded them.
"What's more, mortgage rates remain below inflation and historically low. Investment in new construction or renovation is therefore still profitable in the long term."
