Temperature rises again in housing market
Contrary to recent reports, our figures suggest that the cooling of the housing market would only be a temporary phenomenon and that the end of an overheated property market is not yet in sight.
Various media recently reported that the housing market is finally cooling down after an overheated 2021. However, those statistics are based on the selling prices of homes. Since there is some time between placing a house for sale and the final signing of a deed of sale, the published figures will necessarily lag behind the current reality by some time. However, Realo has the asking price of properties listed for sale on the internet, in other words the value that owners or agents attribute to a property today. This allows us to follow market trends much more directly.
A comparison with sales figures, published quarterly by Statbel, shows that at the national level, asking prices are about 6 months (or 2 quarters) ahead of selling prices. Recent reports around a cooling property market should therefore be seen in the light of delayed reporting.
A few months back, we self still published the message that the market was cooling down. However, those analyses were only based on the first quarter of 2022 and also went into less detail. A re-analysis of that data up to the end of the first half of the year, on a quarterly basis and broken down for houses and flats, paints a different story.
Cooling housing market only temporary
Around the second half of 2021, we see that the growth in house prices temporarily stops. The number of publications online is also slightly lower around that period, and publications stay online for a slightly longer time compared to previous quarters. If we assume a delayed reporting of around 6 months for sales prices, this corresponds exactly to this temporary period of relative calm. In other words, current reporting around a cooling market could correspond to this calmer period 6 months earlier.
It is possible that buyers have been driven by the fierce rise since early 2022 in interest rates on the one hand (which continues to make loans more expensive) and inflation on the other (which reduces purchasing power). So to speak, in the current circumstances, it is always better to buy today rather than tomorrow, overheating the market.
Flats also back more expensive
A similar but more nuanced story plays out for apartments. We do not see a complete halt in price increases in the second half of 2021 in flats, but here too we see prices hovering around 25% above 2015 levels. By comparison, in the previous 6 months, prices still rose by 4 percentage points. The number of flats published online is also slightly lower in this period. And again, we see that from 2022 onwards, prices go back up more steeply, as does the number of publications online. The difference with the evolution of house prices is that flats continue to rise at a fairly stable rate, while houses have started to rise much more sharply since mid-2020. Thus, flat prices seem less subject to rising inflation rates for the time being.
Our figures therefore suggest that we should not expect the announced cooling of the housing market to continue in the foreseeable future. A look at the rental market shows a similar trend. However, we still have to wait until the end of the years before we can also see this trend confirmed in sales prices.
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