Spiralling property prices across Belgium

13 May 2005

BRUSSELS – Soaring property prices are no longer being compensated in Belgium by low interest rates, according to a study by a major bank.

In its bimonthly guide “Focus on the Belgian Economy”, ING said the first three months of 2005 had seen prices soar by 3.4 percent, compared to the same time last year.

That amounted to the most significant rise in the market since 1999, said the author of the study, Ivan Van de Cloot.

He added: “We can clearly see that there will be a negative change in the second trimester of 2005 when it comes to the ‘accessibility index’, given the absence of a lowering in taxes to compensate for the rise in property prices.”

The news will come as a blow to those trying to get onto Belgium’s property ladder.

Until very recently, the high prices of flats and houses have been balanced out by relatively cheap borrowing.

The mortgage repayments for the same house in 2004, for instance, remained the same as in 2000.

Van de Cloot produced a graph to show the ‘accessibility index’ had been at its highest in 1998.

He said there was little risk of a property crash in Belgium, but added: “Experience shows that a rise in tax brings with it, after a small delay, a slowing down in the rate of growth in property prices.”

Subject: Belgian news