The “real estate purchasing power” of Belgians is gradually increasing: here’s why

1. Prices: 2024, year of (slight) recovery

In terms of prices – Immoweb mainly based on the prices displayed for advertisements -, first of all, those responsible for this study estimate that 2024 should be a year of (slight) recovery, after two years marked by a significant drop in prices. soft – both in terms of transaction volume and the prices themselves.

“Since January 1, 2024, the increase in prices has now reached + 2%, thus surpassing that of the same period in 2023 (+ 1.4%). And the national average price now stands at 2,325 euros per m²”notes Immobel. However, with strong regional variations, per m² being worth 1,733 euros in Wallonia, 2,471 euros in Flanders and 3,348 euros in Brussels.

The fall in mortgage rates is underway: “We are moving towards loans at 2.5% per year”

If the trend observed over the last two quarters (+ 0.9% each time) continues, the average price increase should reach almost 3% over the whole of 2024 – not far from the average level of the inflation for 2024. A recovery, therefore, “but this increase remains below those observed between 2018 and 2022.. And a recovery that Immoweb managers mainly explain by the movement of lower rates that began several months ago on the mortgage credit front.

2. “Real estate purchasing power” in the catching-up phase.

“Real estate purchasing power” refers to the number of square meters that a Belgian household (2 married people or legal cohabitants) with a median income can acquire, through a mortgage loan, explains Immoweb. The calculation is based on the assumption of a personal contribution of 10% on the value of the property as well as the payment of transaction costs (registration fees, notary fees) via own funds – which banks generally require.

Rents under strong pressure, worrying situation in Brussels: here is the expected increase for 2024

So, how is this famous real estate purchasing power doing? It took a serious hit between 2022 and the end of 2023, with the rise in mortgage rates. For a 20-year fixed rate loan, this rate was around 3.8% per year at the end of 2023, specifies Immobel. Now, those responsible for the site, based on figures from Immotheker Finotheker, estimate that it is around 3.2%, or even 3.1%. It has therefore lost at least 0.6 basis points in nine months, following two reductions in the key rates of the European Central Bank (ECB). Result : “This reduction allowed Belgian households to recover on average 6 m² of real estate purchasing power in 2024, after having lost 18 m² between the start of 2022 and the end of 2023”specifies Piet Derriks, general director of Immoweb.

And this decline should become even more pronounced, according to many experts who estimate that we are moving towards rates of 2.5% to 2.7% in the medium term. But what do we think about it on the Immoweb side? “In the medium term, it seems possible to us that interest rates could land between 2.5% and 3% (with a more probable trend towards 3%), but this will depend in particular on economic data and decisions on ECB key rates”, responds, cautiously, Jonathan Frisch, real estate economist at Immoweb.