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The Belgian housing market continued to perform well in recent years despite successive crises. Nevertheless, a weakening of buying and construction activity has been noticeable in recent quarters. This takes place against the backdrop of rising interest rates and is accompanied by lower annual house price growth dynamics. Together with strong nominal income growth among households (a consequence of high inflation, automatic indexation, and robust job creation), the less exuberant house price dynamics put downward pressure on the overvaluation of the Belgian housing market. This was offset by upward pressure due to the rise in interest rates. On balance, the overvaluation, approached from an econometric model, remained between roughly 10-15%. The household debt ratio continued to rise in recent years, although that trend seems to have reversed recently. The headwinds in the housing market will likely result in a further deceleration in the nominal price growth rate in 2023-2024. Given still relatively high general inflation, that implies a house price decline in real terms.

2022 was a year of surprises, not only for investors but also for economists and politicians. The war in Ukraine unleashed hyperinflation, resulting in rising interest rates. These rising interest rates then caused a sharp drop in the stock- and bond market.

What will it be in 2023? Will it be a continuation of last year’s malaise, or will it clear up so that 2023 will be a good year? Sven Sterckx, member of the Board of Directors of Dierickx Leys Private Bank, provides insight into the bank’s vision of the coming year.

We provide a brief overview of the impact that the low‑carbon transition is expected to have on financial markets. First, we summarise the latest research on the pricing of transition risks by financial markets and survey the literature on the greenium of stocks and bonds. Second, we examine the most recent regulatory developments relating to green finance at the European and Belgian levels, and briefly discuss the characteristics of the most‑used standards for green bonds. Finally, we turn to developments on the green bond market in Belgium and three neighbouring countries (Germany, France and the Netherlands). In this regard, we shed light on the supply and demand for these instruments, focusing on the issuance of green bonds by governments, financial institutions, and non‑financial corporations, and the uptake of such bonds by various economic agents (households, non‑financial corporations, monetary institutions, pension funds, and others).

The need to step up coordination around corporate taxation has returned to the forefront in recent years. The underlying article discusses the OECD approach to rethink the international corporate tax framework: the main elements of the two-pillar solution, the resulting tax revenue and other economic effects are discussed as well as some other -more general- reflections on its blueprint. All in all, the article argues that the two-pillar solution will effectively deliver what it was designed to do i.e., to reduce tax competition between countries, to reinstate the link between the place where taxes are paid and the place where value is created and to ensure that large multinationals pay their fair share of tax.