The Belgian property market: stormy seas, but there is a glimmer of hope
5 min
The Belgian property market has weathered many storms in recent years. First came the interest rate spike after the pandemic, then the rise in construction costs following the Russian invasion of Ukraine – barely had the market recovered from one shock before the next one hit. And just as interest rates began to ease somewhat between late 2023 and early 2025, and cautious optimism returned, a new war – this time in Iran – is throwing a spanner in the works.
Belgian construction sector caught in the eye of the storm
The closure of the Strait of Hormuz is having an impact on the Belgian construction sector. Aluminium, 24% of whose global production comes from the Middle East, was 23% more expensive in mid-April than at the start of the year. On top of that, energy costs are rising, which directly affect the production of bricks and cement, as both are highly energy-intensive materials. The outcome is easy to predict: construction is rapidly becoming more expensive.
But there is more. Long-term interest rates, which are so important for monthly mortgage repayments, have climbed to 3.75% on the ten-year Belgian government bond, the highest level since early 2012. For anyone looking to buy a home, this means paying more interest on the same amount borrowed. Or no longer being able to borrow the same amount.
A home? Almost a privilege
The combination of high construction costs and expensive loans has made the Belgian property market vulnerable. On average, households now have to spend almost a quarter of their combined income on repaying a mortgage. This is close to the highest level seen in forty years.
Matexi has provided a concrete example of this: the proportion of households able to afford a newly built home has halved since 2021, falling from 5% to just over 2%. For newly built apartments, that percentage has fallen from 9% to around 4%. In other words, buying a new home is now effectively out of reach for the vast majority of Belgians.
Planning permission: Kafka at its purest
As if that were not enough, the supply of new homes is also extremely limited. This is not due to a lack of land, architects or contractors, but because obtaining planning permission in this country has become an obstacle course that would test the patience of even the most determined property developer.
According to a study by IDEA Consult and KU Leuven, in the best-case scenario, you wait 28 months for planning permission. The unlucky few, or those who face objections from neighbours, can find themselves in a legal marathon lasting up to 65 months, involving administrative appeals, the Council for Permit Disputes and the Council of State. That is more than five years. Combined with financing rates that remain considerably higher than the rock-bottom levels seen before 2020, this makes property developers think twice before breaking ground on new projects.
The result? The number of building permits fell to a historic low in January. More recently, however, a cautious recovery has begun to emerge; let us hope it is more than just a statistical anomaly.
The Great Transfer: grandparents as a lifeline
And yet… if you look beyond the pessimism, you can still see a glimmer of hope in the distance. It has a name: the Great Transfer.
Belgians aged over 65 hold considerable wealth. Their financial wealth amounts to €1.3 trillion, while their property wealth reaches €1.97 trillion. The median wealth of someone aged between 65 and 74 is around €307,000. The question is what this huge generation of baby boomers plans to do with its savings.
The answer is surprisingly positive: almost 70% of people aged over 65 are open to making gifts. A quarter have already done so. Among those who give, 82% prefer to support their children, but nearly half are also considering giving directly to their grandchildren. This is precisely where things become interesting.
This is because the parents of those grandchildren are often in their fifties now and financially settled. The grandchildren themselves are typically aged between 20 and 30, the age at which many people dream of having a place of their own but often lack the means to do so. A gift that skips a generation could make that dream achievable again without property prices having to fall dramatically first.
It is not a miracle solution. However, when buying a new home is becoming unattainable for many, grandparents' savings could be the difference between renting forever and finally owning your own home.