Prices in the Belgian new construction market reach a ceiling in 2023

Waregem/Ghent, January 2, 2024 - During the fourth quarter of 2023, the prices of new real estate properties in Belgium stabilized. This marks a temporary end to several years of price increases in the new construction market, which have been occurring at a faster pace than in the secondary market. This is according to the New Construction Barometer, an initiative of the neighborhood developer Matexi and the real estate data platform Realo, which tracks the evolution of new property prices in the Belgian market.

The figures for the fourth quarter provide a better understanding of the underlying trends of the past year. Although it is premature to speak of a break, the stabilization of new property prices is clearly not a surprise. After the first lockdown during the pandemic, the greatly increased demand, which far exceeded the supply, had pushed prices up. The post-corona economic recovery created inflation, which led to higher construction costs. The energy crisis added to this at the beginning of 2022. All these factors have driven up the price of new eco-efficient constructions.

The interventions of the ECB to curb inflation have had an upward effect on rates, which has inevitably slowed down real estate transactions. Over the course of 2023, the ECB's interest rate policy has helped to reduce inflation, resulting in a less sharp increase in construction costs, among other things. The fact that these costs have stabilized (since the second quarter of 2023) and that affordability has decreased following rate hikes now leads to a capping of new property prices.

Analyzing the fourth quarter of 2023, there are minimal price changes in the Belgian new construction market: apartment prices increased by 0.97% compared to the previous quarter, and house prices by 0.04%. On an annual basis, apartment and house prices have increased by 5.07% and 3.11%, respectively. The latest quarterly results confirm previous signals of a stabilization in the new construction market after a period of significant increases – between 2017 and 2023, prices increased by 33.8% (apartments) and 39.7% (houses).

The stabilization is due to the two previously mentioned factors. Roel Helgers, Market Economist at Matexi: “The price stabilization can be partly explained by the interest rate increases implemented by the European Central Bank and other central banks in 2022 and 2023. As a result of the higher interest rates, not only did the number of real estate transactions decrease, but the resulting economic cooling also led to the stabilization of construction material prices.

Fabrice Luyckx, data specialist at Realo: “The recent results of the New Construction Barometer point to a temporary stabilization of new construction prices, as we previously saw in the secondary market. However, we should not lose sight of the fact that new construction prices increased much more than those of secondary homes. The price increases we are seeing today in energy-efficient existing homes may indicate a market correction, where energy efficiency has become a determining factor for housing prices.

All this gives the following prices and price evolutions for the different segments and the different regions of the country:

About the New Build Barometer

The New Build Barometer objectively collects data from online real estate listings, open data from the government, and other online sources. This results in a substantial and representative sample of the entire Belgian new construction market. The academic and independently validated analysis method allows for more accurate tracking of the actual price evolutions for new houses and apartments, taking into account changes in the characteristics of properties over time.

The New Build Barometer follows the current price evolutions (excl. VAT) for a typical Belgian house, being a semi-detached construction of 160 m2 with three bedrooms, a bathroom, and a garden. In the apartment segment, this refers to an apartment of 95 m2 with two bedrooms and a bathroom.

Read all information from the New Build Barometer on the website.