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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