The Belgian housing market: should we worry?

Research report

Abstract:

The Belgian housing market was in a good shape in 2018. Both building permits and sales of existing homes were booming, partly driven by the real estate appetite of investors. This strong interest translated into continued increases of house prices. Against the background of strong household debt accumulation and (still limited) overvaluation, the risks of an overheating market are increasing. More and more, a duality is emerging between those for whom real estate becomes unaffordable or requires a large absorption of debt, and those who are still able and willing to buy (often as an investment) because they have the means to do so. On the positive side, however, the average monthly repayment burden of families with a mortgage loan has not been increasing further, thanks to income growth and low interest rates. The number of defaults also remains very low. But in the event of a financial or economic shock, such as a jump in interest rates or unemployment, the situation can change. Therefore, prudence with regard to lending and a tempering of investment enthusiasm are necessary to prevent the Belgian real estate market from overheating. It would be good if house prices do not rise by more than 2.0 to 2.5% per year in the coming years. Given the somewhat less favourable development of market fundamentals, such a scenario seems likely.  
 
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Disclaimer:

Any opinion expressed in this publication represents the personal opinion by the author(s). Neither the degree to which the hypotheses, risks and forecasts contained in this report reflect market expectations, nor their effective chances of realisation can be guaranteed. Any forecasts are indicative. The information contained in this publication is general in nature and for information purposes only. It may not be considered as investment advice. Sustainability is part of the overall business strategy of KBC Group NV (see https://www.kbc.com/en/corporate-sustainability.html). We take this strategy into account when choosing topics for our publications, but a thorough analysis of economic and financial developments requires discussing a wider variety of topics. This publication cannot be considered as ‘investment research’ as described in the law and regulations concerning the markets for financial instruments. Any transfer, distribution or reproduction in any form or means of information is prohibited without the express prior written consent of KBC Group NV. KBC cannot be held responsible for the accuracy or completeness of this information.

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