Prices of energy-efficient homes soar amid energy crisis
One of the defining factors of 2022 was the energy crisis, with energy prices reaching their highest levels ever. As a result, the energy efficiency of homes in Belgium has suddenly been put under a magnifying glass. The current situation is hardly encouraging. According to our estimates, the average Belgian house consumes 365 kWh/m2/year (EPC D) and a flat 176 kWh/m2/year (EPC B). The European Commission has set a target for all buildings in Europe to be carbon neutral by 2050. In Belgium, these targets vary by region, but we can roughly say that all buildings should be A-labelled (< 100 kWh/m2/year) by 2050. According to our latest figures, only 3% of houses and 11% of apartments would currently meet this criterion. In fact, almost a third of homes currently fall outside the category of over 500 kWh/m/year. So we have a lot of work to do. This dire situation is also reflected in the 2022 property market.
Demand for energy-efficient homes on the rise
In both Flanders and Wallonia, interest in the most energy-efficient houses was higher than in the previous year: the price of the most energy-efficient houses and apartments started to rise faster in 2022. In Flanders, for the first time, those who wanted to buy an A or B label house had to pay more than for a C label house. Compared to a reference house with label D, they paid 9% more for the most energy-efficient houses. The same is true in Wallonia, although the price differences there are a little more pronounced: since this year, a low-energy house costs 15% more than the reference house. Flats have not been spared either. For appartments, which are generally already more energy efficient than houses, the price difference between B and A label increased further in 2022 in both Flanders and Wallonia.
Another striking trend is that energy-guzzling homes have not become less attractive (read: cheaper). They are, of course, the cheapest segment of the market. In Flanders, you will pay 11% less in 2022 and in Wallonia 15% less for a house with an F label than for the same house with a D label. However, when compared to the category just above it, we see that the worst performing houses have increased in price just as fast or even faster since 2020.
|2023 outlook: bouwshift and incentives|
Contrary to popular belief, we do not expect the price of energy-intensive houses to fall or even rise, at least in Flanders. Because of the 'bouwshift', building land will only become scarcer and more expensive. A more advantageous alternative is the energy-guzzling house. As described above, these are still the cheapest segment of the market. More importantly, both the Belgian government and regional governments offer financial incentives to buy up and demolish such houses. This year, the Belgian government extended the reduced VAT rate of 6% on the demolition and reconstruction of houses to the whole of Belgium until 2023. As with the renovation subsidies in Flanders, such interventions increase borrowing capacity, which in turn pushes up prices. Crucially, this trend only applies to the worst performing houses. Houses that do not score well in terms of energy efficiency, but are still within the 'acceptable' range, will not be able to take advantage of these benefits and are likely to fall in price.
1As each region in Belgium decides for itself how to calculate and delimit the energy performance score, we always look at Flanders and Wallonia separately here. For the Brussels-Capital region, there is too little data to draw reliable conclusions about the impact of the energy performance score over time.
2For convenience, we use the labels as predetermined by the Flemish government.
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