Like many other developed countries, Belgium experienced a house price boom in the two decades leading up to the onset of the financial crisis in 2008. Unlike many of those countries, though, the ensuing price correction was little more than a blip. Home prices fell by just 1.2% in the first two quarters of 2009, before resuming their upward trend, albeit at a more moderate pace. While Belgium’s sustained rise in house prices wasn’t as steep as in
Ireland, the U.K., or Spain, prices nevertheless multiplied by 2.8x in real terms between the first quarter of 1985 and the fourth quarter of 2008 and by 1.8x since the first quarter of 1997.
Can the rise continue? We have identified a number of factors that should keep underpinning Belgium’s housing market activity, not least a limited housing supply, and prices that may still be more affordable than the rapid price increases of recent years appear to suggest. However, amid an uncertain economic outlook and in an age of government austerity, we expect that some of the factors that have supported house prices are likely to run their course and will not provide the same degree of support in the future.
·Prices for residential housing in Belgium are showing signs of slowing after a sustained increase since the mid 1980s and only a minor setback in 2008/2009 at the onset of the global financial crisis.
· Our analysis shows that homes may still be more affordable than rising prices appear to suggest.
· Nevertheless, we anticipate that less supportive tax policies and tighter lending conditions will likely decelerate housing market growth over the next few years.
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