A shortage of residential new construction is looming
In Belgium, we have been noticing for some time that the number of building permits for new homes continues to fall. In fact, in 2024, the lowest number of permits in more than twenty years was registered, for only 44,150 new homes. A decrease of 12.9% compared to 2023. The sharpest decline was recorded in the Brussels-Capital Region, with a drop in building permits for new homes of no less than 47.1%. These are figures from Statbel,
The downward trend is striking, especially when you know that the demand for housing is still high. But why is it that so little is being built?
Construction costs
Firstly, construction costs have risen sharply. Materials have become more expensive, as have wages in the construction sector. Building a house or apartment costs much more today than, say, five years ago. This makes it more difficult for developers to start profitable projects.
Slow building permits
The administrative side also plays a role. Obtaining a building permit is often a slow and complicated process. Local authorities have a hard time processing files quickly, and the rules are strict. This causes frustration among builders and developers, who sometimes drop out before the project has even started.
Stricter sustainability requirements
On top of that, there are the increasingly strict requirements regarding sustainability for new construction. From 2025, stricter rules will apply to new-build homes in Flanders. Connections to natural gas are no longer allowed. New homes must switch completely to sustainable heating systems such as a heat pump or a heat network. In addition, every new-build home must generate its own renewable energy, for example via solar panels. Energy performance regulations are also becoming stricter: heating systems must achieve an efficiency of at least 130%, which excludes traditional gas or oil-fired systems.
Loans more expensive
Another important reason is that borrowing has become much more expensive. Interest rates on home loans have risen sharply in recent years. Where you used to be able to borrow cheaply, you now pay much more interest. This means that families can borrow less and are therefore less likely to take the step to a new construction project. Young families and singles in particular have a hard time finding something that fits their budget.
Time to take action
Nevertheless, there is a need for new homes. The population is growing, and there are more and more small households. If more construction does not start soon, the shortage of affordable housing threatens to get worse. In the long run, this can lead to higher rents and more people who cannot find suitable housing.
But capping rents is not a good idea. This will only increase the shortage of new construction and homes for rent. For example, since 1 May 2025, rents in Brussels have been effectively regulated through a new ordinance aimed at combating excessive rents. The essence of the measure is that a rent is considered excessive when it is more than 20% above the reference rent, without a valid reason. This reference rent is calculated on the basis of objective criteria such as the location, surface area, year of construction, facilities and energy performance of the home.
Better solutions are possible. Faster and simpler permit procedures would already help a lot. Tax benefits or premiums for those who build sustainably and energy-efficiently can also give a boost. For example, the federal government wants to make the reduced VAT rate of 6% on demolition and reconstruction permanent from 1 July 2025. This would also apply to project developers, under certain conditions.
But more will be needed to turn the tide. The construction sector is at a tipping point. If we want everyone in Belgium to be able to find an affordable and comfortable home, now is the time to act.
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