Belgium’s residential real estate market is set to rebound in 2025, with housing prices expected to rise by 3%, following a period of stagnation. This recovery will be fueled by a combination of factors, including falling interest rates, rising wages, an ongoing housing shortage, and significant legislative changes. According to economic forecasts, price growth will continue into 2026, with a projected increase of 3.8%.
Affordability Concerns Among Belgians
A recent ING consumer survey (October 2024) reveals that over half of Belgians already consider housing unaffordable, whether renting or buying. This sentiment is particularly strong among younger buyers, with 63% of respondents believing that future generations will face even greater challenges in entering the housing market. The survey also highlights concerns over the affordability of energy-efficient homes, with most respondents anticipating higher costs due to stricter environmental regulations. Only 34% expressed similar worries about energy-consuming homes, underscoring a growing divide in housing affordability.
Interest Rate Cuts Provide Some Relief
The Belgian real estate market has been significantly impacted by rising mortgage rates in recent years, a direct result of the European Central Bank’s (ECB) interest rate hikes. These increases reduced buyers’ borrowing capacity, leading to a slowdown in home purchases. However, since June 2024, the ECB has started cutting rates, causing a decrease in mortgage rates and improving affordability. While short-term rates are expected to decline further, long-term rates are anticipated to stabilize in 2025, with only a slight increase. These changes have prompted many potential buyers to reconsider their “wait-and-see” approach, fueling a surge in transactions.
Legislative Changes Impact Prices
In addition to the easing of mortgage rates, several legislative changes are expected to influence the market. A key development is the mandatory renovation requirement in Flanders, which has led to a price difference between energy-efficient and energy-consuming homes. Starting in 2025, registration fees for primary residences will be reduced in both Flanders and Wallonia, with Flanders’ fees dropping from 3% to 2% and Wallonia’s from 12.5% to 3%. This move is expected to drive up property prices, particularly benefiting sellers. However, the impact of these fee reductions will be tempered by the abolition of certain benefits in both regions, which could moderate the price increase.
The trend of rising prices for energy-efficient homes is expected to continue, although the relaxation of renovation obligations could lead to a stronger price increase for energy-consuming homes. Despite this, the differential in price growth between energy-efficient and energy-consuming properties is likely to remain due to ongoing incentives and reduced registration fees for energy-efficient homes.
Outlook for the Belgian Housing Market
After a modest price increase of 0.5% in 2024, Belgium’s residential real estate market is projected to see a 3% price growth in 2025, driven by favorable market conditions such as stable mortgage rates, wage indexation, reduced registration fees, and continued housing shortages. The upward trajectory is expected to continue into 2026, with prices increasing by 3.8%. As affordability remains a key issue, the recovery of the housing market will offer some relief to both buyers and sellers, but challenges will persist, particularly for younger generations.
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