Private investors return to the Belgian residential market
The Belgian housing market has undergone a remarkable shift over the past year, with private investors showing renewed interest. This rebound can be attributed to several factors, including more favorable market conditions, attractive investment opportunities, and a decline in mortgage rates.
p2
Market Conditions and Investment Opportunities
The Belgian housing market has always been a stable investment environment, but recent trends have made the market even more attractive. Demand for housing remains strong, driven by population growth and urbanization. In addition, the emergence of new forms of housing, such as co-living spaces, has opened up new investment opportunities. These innovative living arrangements cater to modern lifestyles and sustainability issues, making them attractive to tenants and investors alike.
Private investors are particularly attracted to the Belgian housing market because of its relatively high rental yields, inflation protection and potential for capital growth.
Attractive real estate returns
Rental yields for residential investments range between 4.00% and 4.50% for apartments in prime locations in the city, taking into account transaction taxes and property taxes. Older apartments may be priced lower (with higher returns) if renovation or energy efficiency investment is needed. Student rooms and co-living spaces typically offer slightly higher returns on investment, due to more intensive commercialization and higher maintenance costs. For asset deals, the purchase of residential real estate must take into account the registration fees of 10% in Flanders and 12.5% in Brussels and Wallonia. The property tax (precompte immobilier) is a regional tax on real estate that must be paid annually by the owner of the property. This tax is calculated based on the cadastral income (CI) of the property, and landlords cannot pass this tax on to tenants, which means that it is the landlord's responsibility to pay it.
Rent indexation
Indexation in Belgium is always based on fluctuations in the health price index. The health index is a measure derived from the consumer price index (i.e. inflation), which excludes certain products such as alcoholic beverages, tobacco and motor fuels.
It is also important to understand that Belgium has a system of automatic wage indexation that adjusts wages and pensions to keep pace with inflation. This means that salaries are periodically increased based on the consumer price index (CPI), so that households maintain their purchasing power, despite rising costs.
Capital growth
In addition to the return on apartments, the possible future price increase of the property must also be taken into account. And in terms of historical value increase, the Belgian housing market has an impressive track record. For the whole of Belgium, median apartment prices have increased by 59.3% since 2010, with an average of 3.65% per year, according to figures from Statbel. In cities such as Antwerp, Ghent, Leuven, Mechelen and Hasselt, the annual price increases for apartments are usually above 4%. Even more impressively, the median apartment prices for Belgium did not register a single negative year in the same period, with only one year (2014) having 0% price increase.
Evolution of mortgage rates
Mortgage rates in Belgium have fluctuated significantly in recent years. After a period of strong increases, rates have stabilized and even fallen. As of April 2025, the average mortgage interest rate for a 20-year loan is around 3.2%. This is a significant drop from the highest level in 2023, when it was above 3.8%.
The fall in mortgage rates in Belgium can largely be attributed to a noticeable decline in inflation and the expectation of continued stability in price levels. As inflation eases, lenders are encouraged to adjust their mortgage rates downwards, making borrowing more accessible and affordable for potential property buyers.
This favourable environment for mortgages is further supported by proactive measures by the European Central Bank (ECB), which has strategically lowered benchmark interest rates. This central bank policy has allowed lenders to offer reduced rates, creating a more favorable environment for housing financing in Belgium.
Conclusion
In summary, the renewed interest of private investors in the Belgian housing market reflects a confluence of favorable market dynamics, including high rental yields, attractive real estate options and stabilizing mortgage rates. But also the favourable demographic evolution and economic conditions. With the right real estate strategy and market insights, investors can take advantage of these opportunities to further grow their real estate portfolios.
