Second-Quarter Resilience Masks A More Challenging Outlook For Belgian Housing

(MENAFN- ING) Housing market activity remains resilient, but momentum is likely to weaken

Surprisingly, the Belgian housing market has so far remained relatively resilient amid tensions in the Middle East and the upward pressure they've applied on interest rates. Transactions increased by 2.4% in the second quarter compared with the previous quarter, although activity was still 4.1% lower than in the second quarter of 2025. House prices also continued to rise, increasing by 0.2% quarter-on-quarter and by 5.3% year-on-year.

The underlying picture, however, is less favourable. Mortgage lending remains weak, with the number of new mortgages in the first eight months of the year still around 10% below the level recorded a year earlier. While the latest housing market figures have surprised on the upside, weaker mortgage activity suggests that momentum is likely to slow in the coming quarters.

Higher interest rates point to a more challenging outlook

Long-term interest rates have continued to rise since the start of the conflict in the Middle East – and as long as it persists, we see little room for a decline. This means that financing conditions are likely to remain restrictive. A fall in energy prices is likely a necessary condition for long-term interest rates easing, although they are still expected to remain above their pre-conflict levels.

While recent housing data has been more resilient than expected, the outlook remains thus challenging. Following three years of real house price declines between 2022 and 2024, 2025 marked a return to positive real price growth. However, in the coming years, we expect the Belgian housing market to gradually cool again, with nominal median house prices increasing by 2.5% in 2026 and 2.0% in 2027.

Higher energy prices could further widen the gap between efficient and inefficient homes

The current environment could once again widen the price gap between energy-efficient and energy-intensive homes. As temperatures begin to fall and energy consumption rises, the financial benefits of energy-efficient housing are likely to become more visible again. The energy crisis of 2022 has had a lasting impact on how Belgian households assess the value of their homes. Before the crisis, strong energy performance was often viewed as an additional selling point. Since then, soaring energy bills, alongside increasingly stringent renovation requirements, have highlighted the financial risks associated with poorly insulated properties.

Recent increases in energy prices further reinforce this trend. Higher energy costs improve the economics of investments in insulation, high-performance glazing and more efficient heating systems by shortening their payback periods. At the same time, stricter renovation standards are encouraging buyers to pay closer attention to future renovation costs when making purchasing decisions.

While we expect the Belgian housing market to lose some momentum in the coming quarters, demand for energy-efficient homes should remain relatively resilient. Energy efficiency is increasingly valued not only for its ability to reduce energy expenses, but also as a hedge against future energy price shocks and regulatory risks. As a result, energy performance is becoming an increasingly important determinant of both a property's value and its long-term marketability.

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