Following earlier signs that the property market in Belgium was cooling down, this trend has continued, driven by higher energy prices and rising interest rates. Now, young people are returning to the real estate market.
At the start of 2021, a wave of purchases resulted in property prices in Belgium soaring. However, in the first six months of this year, there were fewer real estate transactions in all regions compared to last year; prices even dropped slightly in the second quarter, according to the Federation of Notaries' latest Real Estate Barometer.
"The decrease in real estate activity is limited, but it has been a long time since the number of transactions decreased in all regions," Notary Bart van Opstal, spokesperson for Notaris.be, said in a statement. The only other time in recent years that this happened was following the first Covid-19 lockdown.
"It is not illogical now that some buyers are putting on the brakes: interest rates are on the rise, energy prices are soaring and there is a lot of uncertainty about how our economy will evolve in the coming months."
Fewer purchases pulls prices down
In the first half of 2022, the number of houses and flats bought in Belgium decreased 1.8% compared to the same period last year. June saw a particularly large drop, with transactions down 12.7% on the same month in 2021.
Although the drop in activity was recorded in all regions, it was most prominent in Wallonia, where the number of transactions dropped by 2.5%. In Flanders a 1.5% decrease was recorded. The market was most stable in Brussels (-0.3%).
In the Flemish region, the largest decrease in activity was in West Flanders (-4.2%) – a popular destination for people purchasing a second home. "This was in line with the first quarter of 2022 when West Flanders already showed a 1.6% decrease," van Opstal said.
While the price of a house increased in the first half of 2022 by 6.3% compared to the annual average in 2021 to €314,666, the drop in activity was noticeable in the second quarter, when the house price was slightly lower than in the first quarter of the year.
"Although that is still an increase, if you take into account inflation, which was 7.7%, the average price fell in real terms in all regions," van Opstal explained.
The average cost of a flat in Belgium is €257,839 (up by 2.4%). But once inflation is accounted for, there was a real price drop of 5.3%.
Buyers getting younger
The average age of people buying property in Belgium so far this year was 39. Almost a third of buyers were 30 years old or younger.
Although this figure was higher in 2017 (30.5%), this dropped to 28% last year. Meanwhile, the share of buyers aged 51– 65 is falling compared to 2021 (from 16.7% to 15% now).
- As purchasing power plummets, property prices keep rising
- Over 70% of Belgian households own their home
"Young buyers have been remarkably active in the market in recent months. Many expect a further rise in interest rates. Young people are now jumping on board to avoid further increases," van Opstal explained.
In Flanders, most young people bought mainly in East Flanders, Antwerp and Limburg, which remains the cheapest place to buy a property (both flats and houses).