Evolutions in real estate
The residential real estate market plays a significant role in the Belgian economy and in the Belgian financial system as it closely interconnects financial institutions, households, and the real economy. Many past financial crises have shown that unsustainable developments in residential real estate markets can be the source of financial sector vulnerabilities and crises, requiring close monitoring and – if necessary – macroprudential measures to identify and address emerging imbalances. The article summarises the main elements of the presentation “Residentieel vastgoed en financiële stabiliteit” (Financieel Forum Oost-Vlaanderen, 30 mei 2022) which, in turn, was a preview of the National Bank of Belgium’s Financial Stability Report published on 7 June 2022.
A thematic article in this publication provides a detailed and comprehensive analysis of recent developments in the Belgian residential real estate market. The Financial Stability Report also provides an update on the rationale and effectiveness of the macroprudential measures that the National Bank of Belgium has taken to mitigate risks to financial stability linked to the Belgian financial sector’s significant exposure to the housing market. It shows amongst other things that the Bank’s prudential expectations for mortgage lending standards, introduced in 2020, seem to have achieved their dual objective: reducing the share of riskier loans in new mortgage loan production while maintaining access to credit for solvent borrowers, including (young) first-time buyers.