Immo: rising rates, falling prices?  - Immo

Immo: rising rates, falling prices? – Immo

The rise in mortgage rates, which began a few months ago, is accelerating. A movement that should normally be accompanied by a drop in real estate prices. It remains to be seen whether this will materialize on the Belgian market.

The economic principle is established: a rise in mortgage rates leads to a fall in property prices. The Belgian real estate market, for example, has taken advantage of the fall in interest rates since the beginning of the 1980s to see its prices soar. “When rates rise, borrowing capacity decreases, explains Etienne de Callataÿ, chief economist at Orcadia Asset Management. Yours but also those of your neighbour. This means…

The economic principle is established: a rise in mortgage rates leads to a fall in property prices. The Belgian real estate market, for example, has taken advantage of the fall in interest rates since the beginning of the 1980s to see its prices soar. “When rates go up, borrowing capacity decreases, explains Etienne de Callataÿ, chief economist at Orcadia Asset Management. , lower prices. The real estate market is currently going through a period of turbulence, after years of calm. The rise in interest rates redistributes the cards somewhat, both for buyers and for investors. A finding confirmed by Febelfin, which has just communicated that loan applications during this first quarter were down 8.5% compared to the first quarter of last year. It remains to be seen whether this loss of momentum will last. “I don’t think we will see a fall in prices but a reduction in price increases because the rates remain very low for the moment”, specifies Etienne de Callataÿ. A series of counterbalances can mitigate the rise in rates. The frenzy around real estate (the concept of safe haven), the uncertainty around the stock markets or even the (positive) trend in household income are all factors against a drop in prices. “While buyer-occupiers can always draw on their savings to acquire the property of their dream, investors are mainly guided by economic calculations, notes Philippe Ledent, economist at ING. A rise in rates impacts their leverage effect and their yield. This could divert them from the market. But the rise in prices will not happen overnight. The first clue to follow will be the duration of the sale of the goods. The longer it is, the slower the market will be and could see its prices drop.

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