Belgium Real Estate Market Analysis 2022

Lalaine C. Delmendo | July 16, 2022

Belgium’s housing market remains fundamentally healthy, primarily buoyed by strong demand. During the year to Q1 2022, the nationwide house price index in Belgium rose by 6.4%, following y-o-y increases of 6% in Q4 2021, 8.2% in Q3, 7.4% in Q2, and 6.9% in Q1, according to Statistics Belgium. However in real terms, prices actually fell 1.5% over the same period, amidst a surge in consumer prices. Overall inflation soared to 9.65% in June 2022 – the highest level since October 1982.

Belgium annual house price change graph

Quarter-on-quarter, the overall house price index increased 1.3% in Q1 2022 but dropped 2% when adjusted for inflation.

Existing dwelling prices rose by 6.7% y-o-y in Q1 2022 (-1.2% inflation-adjusted). New dwelling prices increased 5.1% (-2.7% inflation-adjusted).

Demand is rising strongly again. Residential property transactions in Belgium soared by 17% y-o-y to 143,283 units during 2021, according to Statistics Belgium, in contrast to a decline of 18.2% in 2020 and higher than the annual average growth of 9.8% in 2016-19. It was the second highest number of sales ever recorded. Then in Q1 2022, the total number of sales transaction in the three regions rose further by 15.7% y-o-y to 39,369 units.

During Belgium’s housing boom (2000-Q3 2008), nationwide house prices soared by 129% (86% inflation-adjusted). Since the global financial crisis, house prices have followed the economy. When the economy was strong, house prices rose. When the economy was weak, house prices stagnated.

When the economy emerged from recession in 2011, the housing market bounced back strongly with Brussels house prices surging by 9.6% (5.7% inflation-adjusted). After then house prices rose slowly, by an annual average of just 1.2% in 2012-2015. Since then the pace has quickened. House prices rose by 2.5% in 2016, 3.6% in 2017, 2.5% in 2018, and 4.8% in 2019, on the back of improved economic growth.

Surprisingly, the housing market remained strong in the past two years, despite the Covid-19 pandemic. House prices rose by 5.7% in 2020 and by another 6% in 2021.

The Belgian economy expanded by 6.2% during 2021, following a 5.7% contraction in 2020. In Q1 2022, the economy grew by 4.9% from a year earlier, following y-o-y expansions of 5.7% in Q4 2021, 5.1% in Q3 and 15.2% in Q2.

Belgium’s housing market is expected to continue growing, albeit at a much slower pace, amidst the deterioration in the purchasing power of households due to a surge in inflation, coupled with tighter monetary policy and the adverse impact of the Ukraine crisis.

“We expect house price growth to moderate and think prices will rise by around 4% in 2022,” said the ING. “Higher inflation and tighter monetary policy will put upward pressure on mortgage rates. The war in Ukraine could also lead to an increase in the risk premium set by banks.”

Economic activity is projected to slow in the coming months as soaring inflation due to the fallout from the ongoing Russian invasion of Ukraine, coupled with supply chain disruptions and weaker consumer sentiment, will negatively impact domestic demand and exports. Economic growth is expected to slow to 2% this year and to 1.8% in 2023, according to the European Commission.

Regional house price variations

Belgium is divided into three regions:

  • the Flemish Region that occupies the northern half with Dutch-speaking communities;
  • the Walloon Region which occupies the southern-half and is made-up largely of French-speaking communities, with a small German-speaking community in the south-east; and
  • Brussels, the administrative capital region, an officially tri-lingual city inside the Flemish region.

Each region and community has a separate parliament and executive administration, with power increasingly devolved. There is persisting ethnic conflict, and the political union has come under rising threat.

Property prices in Belgium’s three regions move in the same price cycle, but the capital has registered much the highest price increases. Prices in Brussels surged almost 200% (140% in real terms) from 1998 to 2008, much more than in the two other regions (143% for the Flemish region and 116% in Walloon), according to Statistics Belgium.

The drivers of Belgium’s house price boom were:

  • rapid mortgage market expansion, due to low interest rates and increased competition between banks; and
  • economic and wage growth.

When these conditions were reversed with the global credit crunch, house price rises slowed sharply. From 2009 to 2019, house prices in Brussels increased by only 28% (7% in real terms).

Belgium median prices apartments

In the Flemish and Walloon regions, prices rose in 2009-2019 by 37% (15% in real terms) and 27% (6% in real terms), respectively.

Surprisingly house price growth has noticeably strengthened in the past two years despite the pandemic. In 2020-21, Brussels house prices rose by 14.3% (10.2% in real terms). In the Flemish and Walloon regions, prices increased by an average of 12% (8% in real terms) over the past two years.

In Q1 2022:

  • In Brussels-Capital region, the median price of closed or semi-closed type houses rose by 15.1% y-o-y to €495,000 (US$496,368) and by 28.9% y-o-y to €1,225,000 (US$1,228,386) for open type houses. On the other hand, apartment prices increased by a more modest 5.3% to €249,000 (US$249,688).
  • In the Flemish region (Flanders), the median prices of closed/semi-closed, and open type houses rose by 7.7% to €280,000 (US$280,791) and by 8.2% to €395,000 (US$396,072), respectively. Apartment prices increased 7% y-o-y to €230,000 (US$230,624).
  • In the Walloon region (Wallonia), closed/semi-closed house prices rose by 6.3% y-o-y in Q1 2022 to €169,000 (US$169,381) while open type house prices were up 9.6% to €285,000 (US$285,610). The median price of apartments rose by 8.3% y-o-y to €170,000 (US$170,364).

Belgian housing is overvalued, but by how much?

Belgian house prices remain overvalued, but there are many different opinions on the extent of overvaluation.

According to the National Bank of Belgium, the house price overvaluation in the country actually increased from 14% in 2020 to 21% in 2021 due to the continued increase in house prices – this after the overvaluation doubled in 2019.

Belgium house price indices

“The recent sharp increase in house prices in Belgium, despite the coronavirus crisis and the discontinuation of the housing bonus, was mainly attributable to demand side factors,” said the NBB in its Financial Stability Report 2022. “First, the persistence of the low interest rate environment undoubtedly contributed to continued strong demand for real estate. At an average of 1.4% and 1.9% respectively for fixed and variable rates, interest rates on new mortgage loans remained very low in 2020 and 2021.”

However, the ING cautioned that the overvaluation should not be taken at face value, due to the growing scarcity of building plots and as the change in preferences and the increase in willingness to pay of homebuyers in recent years are not captured in the central bank’s model.

A recent study conducted by Belfius showed a more modest house price overvaluation of at least 8.73%. But it warned that the figure is expected to increase this year given the continued rise in house prices.  

However, an earlier study conducted by the Organisation for Economic Co-operation and Development (OECD) has suggested that Belgium’s housing market is overvalued by as much as 50%, because incomes have not risen as quickly as house prices. Deutsche Bank says that Belgian homes are 53% overvalued, with house prices still 51% higher than the historical average, relative to income.

Residential construction remains fundamentally strong

The number of new residential building permits authorized in Belgium in 2021 rose by 11.2% y-o-y to 31,798, according to Statistics Belgium. Likewise, dwellings authorized increased 4.4% last year, at 57,705 units.

Belgium residential building permits

By region:

  • In Flemish region, residential building permits rose by 8.6% to 23,522 in 2021 from a year earlier while dwellings authorized increased slightly by 1.2% to 43,851 units over the same period.
  • In Brussels-Capital region, residential building permits rose by 19.6% to 165 during 2021 while dwellings authorized fell slightly by 1.4% to just 785.
  • In the Walloon region, residential building permits rose by 19.4% y-o-y to 8,111 in 2021 and dwellings authorized increased 17.3% to 13,069 units.


In Q1 2022, new residential building permits issued fell slightly by 1.1% y-o-y to 8,450 and the number of dwellings authorized declined 3.4% over the same period.

Property transactions rising again

Residential property transactions in Belgium rose strongly by 17% y-o-y to 143,283 units during 2021, according to Statistics Belgium, in contrast to a decline of 18.2% in 2020 and higher than the annual average growth of 9.8% in 2016-19. It was the second highest number of sales ever recorded.

Belgium property transactions

By region:

  • In the Flemish region, property transactions rose by almost 20% y-o-y to 90,682 units in 2021, in stark contrast to a 23.9% fall in 2020.
  • In the Walloon region, sales transactions increased 10.2% y-o-y to a record 40,120 units in 2021, in contrast to a 5.8% decline in 2020.
  • In Brussels-Capital region, sales transactions surged 18.9% to 12,481 units in 2021 from a year earlier, its best showing in recent history and in contrast to a 10.3% fall in the prior year.

The recovery continued in the first quarter of 2022, with the total number of sales transaction in the three regions rising by 15.7% y-o-y to 39,369 units.

Mortgage interest rates remain very low

The average interest rate on housing loans fell slightly to 1.72% in May 2022, down from 1.8% in May 2021 and 1.97% in May 2020, according to the European Central Bank (ECB). Over the same period:

  • Up to 1 year maturity: 2.14%, slightly up from 2% a year earlier and 2.06% two years ago
  • Over 1 and up to 5 years maturity: 1.43%, down from 1.49% a year earlier and 1.62% two years ago
  • Over 5 years maturity: 1.72%, down from 1.81% in May 2021 and 1.98% in May 2020

Belgium mortgage interest rates

From being largely stable from 2012 to 2014, mortgages rates have been falling again in the past several years, after the ECB cut the key rate to zero in March 2016 where it stayed since.

Belgian mortgage market continues to expand strongly

Belgium’s mortgage market has continuously expanded in the past decade – growing from 22.1% of GDP in 2011 to about 42.1% of GDP in 2021.

During 2021, the total amount of new mortgage loans drawn – excluding refinancing – increased to €50 billion, up by 19% from €42 billion in 2020 and by 4.2% from €48 billion in 2019, according to the central bank.

Belgium outstanding housing loans

“Against this background of rapidly increasing house prices and dynamic activity on the housing market, strong growth was also observed in new mortgage lending,” said the NBB in its Financial Stability Report 2022. “Overall, mortgage lending dynamics closely mirror the number of property transactions on the secondary market.”

As a result, the total value of housing loans outstanding increased 8% in 2021, following an annual average growth of 10% during the 2012-20 period. Then in May 2022, outstanding housing loans rose further by 8.9% y-o-y, to €222.19 billion (US$223.74 billion), according to the ECB.

The Belgian mortgage market is dominated by four major private financial conglomerates: BNP Paribas Fortis, KBC Bank, Belfius Bank, and ING Belgium, which account for almost two-thirds of the entire banking sector. Intense competition has led to low fees and charges, and more mortgage options.

Moderate rental yields, large rental market

Gross rental yields on apartments in Brussels ranged from around 4.56% to 5.53%, while yields on houses range from 4.46% to 5.01%, according to Global Property Guide research. Meanwhile, the difference between the yields on small properties, which tends to be higher, and those on larger properties, has shrunk.

“Whilst current yield levels are low, they are higher than in the neighbouring countries and thus remain attractive for international investors as a geographical diversification providing stable returns and prospective capital value growth,” said JLL.

The rental market is about 30% of the housing stock (23% in the private sector, 7% in social housing); but this is falling, and is down from 38% in 1980 and 33% in 1990, because of rent controls (see Landlord and Tenant section).

However, 60% of households in Brussels are renters, a fact partly encouraged by Belgium’s unusually high buy/sell costs.

Economic slowdown

The Belgian economy expanded by 6.2% during 2021, following a 5.7% contraction in 2020. In Q1 2022, the economy grew by 4.9% from a year earlier, following y-o-y expansions of 5.7% in Q4 2021, 5.1% in Q3 and 15.2% in Q2.

Economic activity is projected to slow in the coming months as soaring inflation due to the fallout from the ongoing Russian invasion of Ukraine, coupled with supply chain disruptions and weaker consumer sentiment, will negatively impact domestic demand and exports.

Belgium gdp inflation

Economic growth is expected to slow to 2% this year and to 1.8% in 2023, according to the European Commission. This is compared to the IMF’s economic growth projections for Belgium of 2.1% in 2022 and 1.4% in 2023.

“The Belgian economy is temporarily losing momentum, owing to high (energy) prices and new disruptions in global supply chains because of the war in Ukraine and the strict coronavirus lockdowns in China,” said the National Bank of Belgium.

From 1997 to 2007, the country enjoyed healthy economic growth of about 2.5% per year. But since the financial crisis, growth has been weak. GDP growth was 0.4% in 2008, -2% in 2009, 2.9% in 2010, 1.7% in 2011, 0.7% in 2012, and 0.5% in 2013, mainly due to the adverse impact of the eurozone debt crisis, according to the NBB.

Belgium’s economy has been sluggish since, registering an annual average growth of just less than 1.3% from 2009 to 2019.

Inflation surged to 9.65% in June 2022 – the highest level since October 1982, according to Statistics Belgium.

“The high inflation this month, as in recent months, is largely due to high energy prices. Energy currently has an inflation rate of 55.99% and accounts for 4.81 percentage points of the total inflation” said Statistics Belgium.

Belgium unemployment

Nationwide inflation is projected to reach 8.2% this year, sharply up from 3.2% in 2021 and 0.4% in 2020, based on projections released by the National Bank of Belgium.

In May 2022, the country’s seasonally-adjusted unemployment rate fell to 5.5%, down from 5.7% in the previous month and the lowest level in about two years. Unemployment averaged 5.9% in 2018-21, down from 8% in 2010-17.

Belgium consilidated government gross debt

Belgium’s budget deficit was equivalent to about 5.5% of GDP in 2021, an improvement from a record 9% shortfall seen in 2020 but still far higher than its pre-pandemic deficit of just 2% of GDP in 2019. The deficit is projected to gradually fall to 5% of GDP this year and to 4.4% of GDP in 2023, according to the European Commission.

The country’s gross national debt was equivalent to 108.2% of GDP in 2021, slightly down from 112.8% in 2020 but still up from 97.7% in 2019, according to Eurostat. NBB expects the public debt to fall to 105.3% of GDP this year – a more optimistic projection as compared to the European Commission’s 107.5% estimate.


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