3 real estate trends in 2023
What will happen to our properties in 2023? Will we remodel? What are the trends in property prices? Which is better, renting or buying? We discuss 3 notable trends and insights of what to expect for this year.
Trend 1: Cooling of the property market
In recent years, the property market has changed at different speeds. By 2023, the property market is coming back into balance. We come from a market where buyer pressure was very high. Buyers had to be very quick in the last two years. Demand for homes was high and prices reflected that. The seller knew that bids were above the asking price, so asking prices were set significantly higher. This property movement is now stable again. Property prices do remain higher than five years ago, but the dynamics are different. By 2023, however, the number of homes sold within days and well above the asking price will be rare. And this while the number of homes on the market has stabilised.
Trend 2: Renting is becoming increasingly popular
While the housing market continues to cool down, the rental market is showing an upward trend. Compared to January last year, we have seen the number of let properties double and rents rise sharply. So there is a clear shift from buying/selling to renting/letting. This usually involves a target audience that is forced to rent due to lack of financial resources. After all, we are all facing sharply rising living costs. Young couples looking to buy their own home can already in many cases no longer rely on their parents' piggy banks. When they go to the bank, they need on average 20% of their funds to get a mortgage. Indexation of wages does not solve purchasing power. So more and more people are forced to rent.
Need to sell to rent
Another effect is that people are forced to sell their homes and enter the rental market. This is less common in rural areas, but is increasingly seen in big cities. People then sell their homes and move down in size. They need the reserves to maintain their standard of living.
Rent in the city
Demand for high-quality rental housing is also high. The economy and labour market are not at their lowest point yet. Expats and foreigners are finding their way back to Belgium. Big cities are attracting more tenants, where the property market has a different composition and tends to be more diverse than in rural areas. Think also of singles, divorced couples and senior citizens. In Brussels, for example, 80% of the population is renters and only 20% homeowners.
Trend 3: EPC sets the price
Currently, there are only a few high-quality homes available that cover high energy needs. As with many other things, just this scarcity creates a stable price. By 2023, prices of such homes will continue to rise.
The Achilles' heel of new buildings
New buildings now suffer greatly from rising costs. Building materials are becoming more expensive and workers' wages have risen exponentially. This increased the average construction cost by €300 per square metre. These costs have to be passed on by developers in the final selling price. As a result, either the project is halted or the selling price increases. On the other hand, existing properties that have been heavily renovated with energy efficiency in mind sell very quickly.
Houses with lower E levels are cheaper
On the other hand, interest in buildings with poor energy balances is low. If you want to renovate, you have to expect banks to take into account more expensive materials, longer delivery times and EPCs in mortgages. So even if there is a renovation requirement, a thorough refurbishment is not always feasible or obvious.
Investors are just looking for such properties though. Sales prices of buildings with lower energy performance are expected to fall by 5-10%. Today, we see people bidding 10-12% below their asking price for such properties. That is where the price will automatically stagnate.
To conclude
This article has discussed three trends that can be expected in the real estate market in 2023. The first trend is that the property market will rebalance after the high buyer pressure in recent years. The second trend is that renting becomes more popular as the housing market cools. The third trend is that the price of high-energy housing will continue to rise in 2023, while there are only a few high-quality homes available that meet it.
The current climate in the sector is challenging for both buyers and sellers. There are numerous other issues to consider besides one's personal situation. Thus, one does well to take a strategic approach to buying or selling a property. We are happy to assist you.
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