Always 25 candidates for one rental home, hardly any apartments under 800 euros. At the bottom of the rental market there is a lot of pressure for a home, according to the new rental barometer from CIB. But has rent really become too expensive?
868 euros. That is the average amount that tenants in Flanders had to pay for a rental property last year. In one year, rental properties in Flanders have increased by 6.4 percent, according to the new CIB rental barometer. The real estate agents’ federation, which analyzed more than 55,000 new rental contracts in Flanders and Brussels, speaks of a ‘record increase’.
Yet this increase can be explained quite easily. Last year’s rental barometer showed that new contracts had only increased by 4.7 percent, a lot less than current rental contracts. These current rental contracts are therefore adjusted more quickly according to the health index. With a one-year delay, the prices of the new rental contracts have now also been followed.
The increase in rental prices in Belgium in recent decades has also been virtually in line with that of the euro zone. But that has changed in 2022. “Belgium always reacts more strongly than other countries to price increases in the energy market,” says Johan Van Gompel, senior economist at KBC. “The high inflation in 2022 will also filter through to rental prices more quickly, partly due to our indexation system.”
We are still nowhere near the sky-high rental prices in the Netherlands in Belgium. But the sudden increase compared to other neighboring countries France and Germany, or the entire eurozone, is striking. “Now that energy prices have fallen again, you see that inflation in Belgium was twice as low last year as in the entire euro zone,” says Van Gompel. “It is therefore quite possible that rents in other European countries will catch up this year.”
Lifespan
Rental prices in themselves do not tell everything. It becomes more interesting when you compare them with the general lifespan. And then it turns out, as a study by KBC shows, that rental prices have risen 7.5 percent less than the general lifespan since 2009. “Real incomes increased by 11.5 percent during that period. If you look at the whole picture, renting has become cheaper sooner,” says Van Gompel.
We are talking about averages. CIB points out that the supply of affordable rental properties has shrunk in recent years. For example, last year it turned out that only 4,600 of the more than 55,000 new rental contracts had a rental price of less than 600 euros. As a guideline, only a third of your salary should go to your home. “Then you quickly come to the conclusion that it is a difficult search for people with an income of less than 1,800 euros per month, especially if there is a lot of competition,” says Kristophe Thijs, director of communications at CIB.
And there is no shortage of competition. While real estate agents received an average of 10 to 15 visits for a rental property in 2022, this is now 25 or more. The competition is even fiercer for homes with a rental price below 850 euros.
According to CIB, this will not improve in the coming years. Due to the higher interest rates, real estate agents are seeing more and more investors withdrawing from the rental market. Real estate economist Sven Damen (UAntwerp) also shares this concern. “Investors always consider: will purchasing an apartment or house yield more than, for example, investing on the stock exchange? If they think that they can get a higher return for the same risk with other investments, the supply of new rental properties may indeed shrink.”
Due to this mismatch between supply and demand, the CIB predicts that house prices will rise 1 to 3 percent faster than inflation by the end of this year. The federation calls on the government to make investing more attractive again, for example by reducing VAT for demolition and reconstruction again from 21 to 6 percent.
This would mean that the government would not be ready for its test. In 2007, the federal government reduced the VAT on demolition and reconstruction for private individuals in the central cities to 6 percent. And that did have an effect, according to a study by KU Leuven. In those central cities, 32 percent more homes were rebuilt than in the other cities. “Yet we do not yet know how many of those homes ended up on the rental market,” says researcher Geert Goeyvaerts, who conducted the research.
Other measures
But there are also other measures that can lead to more rental properties coming onto the market. Many projects today die a silent death due to strict building regulations regarding the type of home, the maximum height or the size of the terrace. “Many regulations must guarantee a certain quality of living. But we see that they also form an obstacle for new projects,” says Goeyvaerts.
Flemish Housing Minister Matthias Diependaele (N-VA) acknowledges that the situation at the bottom of the rental market is most dire. For this purpose, he has released 575 million euros for budget rental properties. He also points out that he will invest 841 million euros in social housing in 2023.
“Unfortunately, we see that the current approach does not work,” says Joy Verstichele of the Tenants Platform. There are still more than 176,000 people on the waiting list for social housing. “We must therefore prioritize more social housing.”
According to the tenants’ association, it is also crucial that more people are entitled to a rental allowance. Now this only applies to people who have been on the waiting list for social housing for four years. “If more people were entitled to this earlier, they would have a better chance of finding a suitable home on the private market.”
