For several decades the prices of residential property have continued to rise in Europe and in Belgium. In the years 1980-2000, this growth was also very sustained because it hovered around 10% annually. Furthermore, this growth was coupled with inflation which amounted to almost 7 to 8% per year. Since 2005, we have seen a clear flattening of the property price development curve and even a fall in prices in the first quarter of 2014.
In addition, inflation remains very low in Europe, around 2% per year and interest rates are also very low. All the conditions are therefore met to estimate that we are going through a favorable moment to consider a property purchase and a Belgian loan.
Housing price index drops in Europe and Belgium
The house price index measures inflation in the private property market. This index tracks price changes for new or existing residential properties purchased by households, regardless of the purpose (rental or personal occupancy).
The Belgian housing price index fell 1.6% in the first quarter of 2014 compared to the previous quarter. The annual inflation rate is -1.1%. Average inflation was 1.2% in 2013.
The euro area and European Union housing price index for the first quarter of 2014 will be published by Eurostat on July 10, 2014. In 2013, the average annual inflation rate reached -1.9% in the euro area and -0.9% in the European Union. More information here
Evolution of property prices in Belgium
By analyzing the evolution of the price curves for houses, apartments and villas in Belgium, we note a very marked flattening of the curve since 2010.
It therefore seems that the era of constantly rising property prices is behind us.
This is good news for prospective buyers – borrowers.
On the other hand, the investors can undoubtedly begin to review their strategy if they are willing to bear in mind that the load development curves continue to increase constantly. Real estate remains an investment which results in a net capital gain but much less than in the past.
Evolution of interest rates
The level of mortgage rates is in fact linked to bond rates in force on the financial markets, which vary every day. When bond rates go down, mortgage rates go down too, as credit institutions just follow the market.
By simplifying, we can quickly explain how bond rates evolve: in general, they evolve in the same direction as the stock markets.
In recent years and following the financial crises, investors have opted for more secure financial products such as bonds. As a result, their yields fell sharply as did interest rates.
We are going through a period where interest rates are historically low: with popular credit, we are able to guarantee you a rate of 3.5% over a period of 20 years (fixed rate).
Use our cost simulators
When you make a property purchase, you must not lose the incidental costs that are added to the purchase price. These costs are essentially of two types.
- Credit deed fees: everything you need to know and our simulator here
- The costs of deeds of sale: everything you need to know and our simulator here
Our simulators allow you to have a very precise overview of the costs that will affect your purchase: it is a very practical tool.