Belgium to buck doom-and-gloom forecast

While forecasts of doom and gloom come in from other European countries, the property boom in Belgium is holding firm.

The market in Belgium appears comparatively well-positioned to buck the trend found elsewhere towards decline. In other countries, market saturation, rising interest rates and reduced foreign investment are all contributing to depress prices. In addition, the rise in the stock markets that followed the fall in oil prices is said to be pulling professional investors in other countries back into equities and away from property.

In the UK, house prices are predicted to fall by the second half of this year, with some experts predicting a crash in 2008.

Recent reports from neighbouring France indicate that the property market is moving into decline and investors are running for cover. The signs of downturn are remarkably clear: rarely has there been such national consensus, with up to half of the country’s property agents reporting a considerable reduction since the autumn in the number of transactions completed and a slowdown in transaction times. A survey published in France just before Christmas by the nation’s Notary Publics (Immonot) showed sustained decline in activity and prices. House-owners are quietly being advised to think about selling now if they want to cash in on their gains.

Economists are also sounding the warning bells in Spain where some 800,000 new properties were built during the course of 2005 - as many as in France, Germany and the UK combined. Local economists have viewed this as absolute folly, yet the building growth continued strongly in 2006 and is set to continue - the Spanish building industry has forecast the construction of 5.3 million habitations between 2000 and 2008. Economists say this rate of growth is unsustainable and while prices have risen 150%, new construction has hit saturation point and there has never been so much property available on the market.

In Belgium as in France the notary publics (notaires) are the government’s official land registry agents and all property transactions pass through their hands. They also supplement income by selling properties on behalf of clients. They are consequently ideally placed to know what is happening in the market at grass-roots level and often a more reliable indicator than hustling and ever-optimistic estate agents.

The Belgian notaires have been watching the situation across the border in France with anxiety but believe this country is immune from the same pressures.

It is fair to say that during the course of last year, transaction times for property sales in Belgium have indeed slowed down and price rises have levelled out as more realism has entered the marketplace. But the Belgian market is less prone to professional speculation as seen in France and Spain and is consequently less volatile.

Olivier Jamar, a leading Belgian notaire based in Brabant-Wallon and a former president of France’s association of young notaires says that the consensus among his Belgian colleagues is that the market here is growing at 12-15% and is set to continue in that vein.

"The property markets in countries like France and Spain are driven by professional investors and speculators who are clearly beginning to divest of their property portfolios," he says. "To some extent the Belgian property market is immune from these pressures. It is less driven by professional investors and is also much less affected by the international economic outlook."

This picture of steady growth is the same across the country with the exception of a few outlying regions.

That the banks remain calm and are confident about the prospects is another sign of steady growth, according to Jamar. Talk of banks offering 40-year mortgages as prices rise are fanciful, he says. The property boom had encouraged a couple of banks to talk up long-term mortgages as a solution for the young, but the idea was abandoned as being unrealistic. The length of the average mortgage in Belgium is still around 15 years with younger first-time buyers able to opt for 30 years.

• Patricia Kelly is a freelance journalist based in Brussels.

While forecasts of doom and gloom come in from other European countries, the property boom in Belgium is holding firm.