After years when housing prices were stagnant and unaffected by the financial crisis the real estate market in Brussels is on the rise. While housing prices in Brussels still are among the lowest in Europe, they differ considerably by commune. This makes the decision where to buy in Brussels not easy.
“Prices have increased steadily since 2015 as a result of bigger demand and low interest rates,” says Laurent Dans, Business Manager at KBC bank, to The Brussels Times.
The median price for an apartment increased between 2016 and 2017 in most of the 19 communes in Brussels. Just to mention a few examples: City of Brussels (+8,7%), Etterbeek (+8.2 %), Saint Gille (+12,3%), Koekelberg (+15,1%) and Auderghem (+17,5%).
Are prices in Brussels affected by the influx of expats? “Yes, it seems so,” Laurent replies. “Average prices in some communes with many expats are high. On the other hand, average prices in Brussels are lower than in some other popular Belgian cities. You really need to break down the prices in Brussels on commune level.”
The average price per square meter in all Brussels is around €3,200, compared to €14,900 in London, €9,400 in Stockholm and €9,800 in Paris. Prices are still relatively low even after registration and notary fees of up to 15 – 20 % are included.
According to statistics collected by KBC, 85 % of all expats in Brussels live in 7 communes, which belong to the most expensive ones. In some of them, the market has corrected overrated prices and they fell somewhat last year.
The average price for an apartment in Brussels is €233,000. A single-family home is sold on average for more than €450,000. But average prices for all Brussels do not say very much, it all depends on where in Brussels the house or apartment is located.
Laurent explains that many other factors besides location – or related to location – also affect the price, such as location (floor) in the building, the status of the building (old/renovated/new), neighbourhood, and access to schools and public communications.
The average price for an apartment varies between €160,000 in the northern communes (e.g. Jette and Ganshoren) and €340,000 in Ixelles, the second most expensive commune and popular among French expats. In Saint-Gilles, which is called the new Ixelles, the average price is €235,000.
Which communes or areas are “hot” and have a potential of price increase in the future? Laurent mentions that it has been good to invest in Saint Gilles and still is, because it is easy-going and close to the city centre.
But communes on the other side of the canal, with lot of green areas and good communications, also attract many young people. Prices there are increasing but still relatively low.
As a result of the differences in housing prices by commune and the development of new real estate projects, it is becoming increasingly difficult for expats to decide where they want to live or to invest.
Is it profitable to buy an apartment and rent it out? KBC estimates the average net return on real estate to 4.9%, which could be compared with today’s interest rates of between 1.5 and 3 % on mortgages.
Interest rates on mortgages are calculated individually but what is ensuring for a borrower is that the rate, both for fixed and floating loans, can maximum double during the loan period according to Belgian law. How they will develop in the future is difficult to foresee.
In Belgium there is no regulation on how much can be borrowed as a percentage of the price. KBC offers up to 90 % of the price in loan while other banks have no limitation. Other countries have decided to limit the loan percentage to avert the risk of a housing bubble.
“We help the customer to assess if the price is correct and give advice,” says Laurent. “Our branches in Brussels function as one-stop-shops and decide within 48 hours on a loan application.”
“It’s worthwhile to buy an apartment in Brussels,” concludes Laurent. “In the long run it’s cheaper than renting, and even if you would move from Brussels after a few years, there will always be a demand for the apartment. Furthermore, no tax is paid on the capital gain.”
Other good news is the reduction in registration fees (up to €21 875) when buying an apartment for the first time, provided that the owner stays there for at least 5 years. If the owner sells the apartment after that period and buys a new one, there is a new reduction. This subsidy (abatement) in Brussels replaces the interest tax deduction in Wallonia and Flanders.
The Brussels Times