With a third of your income you can hardly buy a house anywhere

The price hike has calmed down somewhat this year, but under the pressure of rising interest rates, financing a new home is becoming more difficult. If you want to buy a property, you have to spend an increasing portion of your family’s income on the mortgage. The rush to the crown on homes and the resulting rapid rise in interest rates quickly made real estate more inaccessible.

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The rule falls

A new analysis of the data at the municipal level, carried out with data from the notarial barometer, shows that only a handful of cities and municipalities in Flanders and Brussels escape this reality. In two out of three, an average family with an average income has to release more than 33 percent of their income to pay off a home loan. One third of the income is seen as a safe maximum for the installment.

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At the beginning of 2020, just before the coronavirus crisis, the affordability index was still below the maximum in three out of four municipalities. As income growth cannot keep pace with rising house prices, that relationship has been reversed. Average house hunters without a large financial backpack are therefore forced to jump farther than they would actually like.

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In recent months, the unwritten safe third rule has been broken more and more often. In practice, banks apply a new 40 percent rule of thumb, although that flexibility depends on the buyers’ paycheck. For young people and singles, the mortgage bite on the monthly budget is often even greater.

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Already expensive, even more expensive

It is striking that De Tijd’s accessibility index continues to rise, especially in the already expensive municipalities. Take Knokke-Heist, for example, where an average family needed just over half their income two years ago to pay for housing. If we look at the most recent real estate prices, even the entire budget is no longer enough. In Sint-Martens-Latem, Brussels and in the municipalities on the outskirts of the city, inaccessibility has also increased more rapidly than elsewhere.

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Central bank rate hikes in the fight against peak inflation are expected to cool the overheated housing market. A higher mortgage interest rate reduces the borrowing capacity of home seekers. The number of real estate transactions in the first half of this year was already lower than in the same period last year, according to the Notary Barometer. ING and KBC economists expect real estate prices to stabilize globally, only to slightly increase in 2023.

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With a third of your income you can hardly buy a house anywhere

The rule falls

Already expensive, even more expensive

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