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Last Updated: Jan 20, 2017




House prices in Belgium continue to rise modestly, amidst surging demand and a sharp increase in residential construction.

During the year to Q3 2016, the nationwide house price index rose by 2.88% (0.75% inflation-adjusted), after annual rises of 2.19% in Q2 2016, 3.18% in Q1 2016, 1.52% in Q4 2015, and 2.82% in Q3 2015, according to the Statistics Belgium.

The price of new dwellings rose by 3.92% (1.77% inflation-adjusted) y-o-y in Q3 2016. The price of existing dwellings increased 2.48% (0.36% inflation-adjusted) over the same period.

By property type:
  • Regular house prices rose by 2.34% (0.22% inflation-adjusted) y-o-y in Q3 2016. Quarter-on-quarter, prices rose by 4.34% (4.15% inflation-adjusted) in Q3 2016.
  • Villa prices increased 2.68% (0.55% inflation-adjusted) y-o-y in Q3 2016. �During the latest quarter, villa prices rose 3.64% (3.44% inflation-adjusted).
  • Apartment prices fell by 1.32% (-3.37% inflation-adjusted) during the year to Q3 2016, in contrast with an annual rise of 4.39% a year earlier. Quarter-on-quarter, prices dropped 1.13% (1.32% inflation-adjusted) in Q3 2016.

Average house prices stood at �217,541 (US$ 231,540) in the third quarter of last year. During the year to Q3 2016:


  • In Brussels-Capital region, house prices fell by 3.82% (-5.81% inflation-adjusted) to an average of �411,726 (US$ 438,221)
  • In the Flemish region (Flanders), prices of houses increased slightly by 1.16% (-0.94% inflation-adjusted) to an average of �232,773 (US$ 247,752)
  • In the Walloon region (Wallonia), house prices rose by 1.17% (-0.92% inflation-adjusted) to an average of �162,387 (US$ 172,837)

Demand is now picking up. The total number of transactions for regular houses in Belgium rose 18.5% during the first three quarters of 2016 , according to Statistics Belgium, in sharp contrast to the 23.2% sales decline seen in 2015. Likewise, the value of transactions surged 22.4% y-o-y in Jan-Sep 2016.

Residential construction is rising. During the first nine months of 2016, the number of dwelling permits issued in Belgium rose by 16.8% y-o-y, according to the National Bank of Belgium (NBB), while residential building permits increased 8.1% over the same period. In 2015, dwelling permits and residential building permits suffered declines of 15.8% and 14.2%, respectively.

Belgium annual house price change graphDuring Belgium�s housing boom (2000-Q3 2008), nationwide house prices soared by 129% (86% inflation-adjusted). Since the crisis, house prices have followed the economy.  When the economy was strong, house-prices rose. When the economy was weak, house prices stagnated. Belgium�s economic growth in 2016 was estimated at just 1.2%, after growth of 1.5% in 2015 and 1.7% in 2014, according to the NBB. The economy is projected to grow by 1.4% this year.

There are no foreign ownership restrictions in acquiring Belgian property.

Analysis of Belgium Residential Property Market »


RENTAL YIELDS
Last Updated: Oct 29, 2015



Gross rental yields in Brussels range have remained steady over the past year. Gross rental on apartments in Brussels range from around 4.56% to 5.53%, while yields on houses range from 4.46% to 5.01%. Meanwhile, the difference between the yields on small properties, which tends to be higher, and those on larger properties, has shrunk.

Square metre (sq. m.) prices of apartments and houses in the prime districts of Brussels have been increasing, according to the latest survey of Global Property Guide. So too have rents.

All of the apartments and houses included in our survey are located in the prime areas of Brussels. The prime areas we took were Laeken, Nieder-over-Heembeck, Auderghem, Ixelles, St. Gilles, Uccle, Woluwe-St. Pierre, and Woluwe-St. Pierre. Our survey included around 2,300 apartments and houses.

The biggest reason that investors in Belgium will be discouraged is that round trip transaction costs are high for buyers of residential property. See our Belgium residential property transaction costs analysis and our Residential property transaction costs in Belgium compared to other countries

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Dec 19, 2016



Rental Income: Personal income tax range from 25% to 50%, depending on the taxable net income. The taxable net income is the cadastral value, increased by 40%, minus deductible expenses. As a result, the effective rental income tax is a bit lower than the headline rate, ranging from 9.22% to 23.07%.

Capital Gains: Capital gains tax of 16.5% is payable on gains on developed property held for less than five years. After a holding period of five years, no Capital Gains Tax is payable.

Inheritance: Inheritance tax rates in Belgium are progressive and vary according to the degree of kinship, region where the inheritance is opened, and the share inherited by each of the heirs.

Residents: Residents are taxed on worldwide income at progressive rates, from 25% to 50%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Dec 20, 2016



Closing costs are high in Belgium, between 14.60% and 27.60% of property value. The bulk of the cost is accounted for by transfer duties at 10% or 12.5%, depending on the property�s location. Roundtrip costs for new properties are much higher because of the 21% VAT.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: May 30, 2006



Belgian law is pro-tenant.

Rents: Rents can be freely negotiated but rent increases above the inflation rate cannot be written into the contract. If there is a written contract, the rent will be automatically adapted once a year in accordance with the cost of living. Deposit payments must not exceed three month�s rent.

Tenant Security: Belgium�s landlord and tenant law is restrictive as regards the length of rental contracts. The main options for the duration of a lease are: a contract of 9 years and, alternatively, a contract for less than three years.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jan 20, 2017


Belgian economic growth disappointing

The Belgian economy was estimated to have expanded by 1.2% in 2016, a slight slowdown from growth of 1.5% in 2015, according to the NBB. The expansion ongoing since the second half of 2013 was attributed to:
  • Favourable financing conditions in the euro area for both private individuals and corporations that encourage investment
  • Macroeconomic policies less single-mindedly austerity focused

Domestic demand has slowly picked up in the past two years. With oil prices at historic lows, the growth of purchasing power is propelling private consumption.

BelgiumThe economy is projected to grow by 1.4% this year, according to the NBB.

�Belgium's economic growth in 2017, should be a little more sustained than it proved to be in 2016,� says a recent report published by the Institute for Economic and Social Research of UCL (IRES).

�Indeed exports are likely to be able to take advantage of an international economic environment which is becoming progressively better focused. At the same time domestic demand is likely to be supported by both the advantageous position of the employment market and the revival of business and household consumer confidence.�

From 1997 to 2007, the country enjoyed healthy economic growth of about 2.5% per year.  But since the crisis growth has been weak.  GDP growth was 0.7% in 2008, -2.3% in 2009, 2.7% in 2010, 1.8% in 2011, 0.2% in 2012, -0.1% in 2013, and 1.7% in 2014, mainly due to the adverse impact of the eurozone debt crisis, according to Belgostat.

In November 2016, the country�s country's seasonally adjusted unemployment rate was 7.6%, down from 8.7% the previous year, according to the NBB. Over the same period, the jobless rate for men was around 7.8% while it was about 7.5% for women.

Inflation was around 2% in December 2016, up from 1.5% a year earlier, based on the figures from the NBB. The country had average annual inflation of 1.8% from 2010 to 2015, according to the IMF.

In 2016, Belgium's budget deficit was estimated at 3% of GDP, up from 2.5% of GDP a year earlier, according to the European Commission. The deficit is expected to decline to 2.3% of GDP this year.

Belgium�s gross national debt was equivalent to about 107% of GDP in 2016, the highest level since 2002. No significant change is expected over the next two years.

Earlier last year, Belgium was shocked by terrorist attacks in the country's capital, Brussels. In March 22, 2016, three coordinated nail bombings were reported, two at Brussels Airport in Zaventem and another one at the Maalbeek metro station. The incident left a death toll of 32 victims and 3 suicide bombers, as well as around 300 people injured. The act of terrorism, the deadliest in Belgium's history, was claimed by the Islamic State of Iraq and the Levant (ISIL). To avoid any similar incident in the future, Belgian authorities have been conducting massive anti-terrorists raids in recent months, particularly in and around Brussel�sMolenbeek district, which was dubbed as Europe�s jihadi capital.







  • Strong demand for rental units
  • Moderate to high transaction costs
  • Tiresome tenancy length limits
  • Moderate to high taxes
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €3,023 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.87% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,471 For a 120 sq. m. property.
Income Tax: 8.11% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 19.22% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.




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