Home prices rise in Flanders as buyers rush to beat end of tax deduction

Real estate transactions jumped a staggering 43% in October on the same month last year, a phenomenon directly attributable to the scrapping of the woonbonus, or mortgage tax deduction, from 1 January.

The government of Flanders repealed the tax break last month as part of its new government accord. While previously the interest and insurance paid annually on a mortgage was tax deductible up to €2,280, that will not be the case for deals closed after 31 December.

While in October of 2018 some 19,000 homes and apartments were purchased in Flanders, this month the figure was 27,152.

“Transactions rose by 4% across Belgium in the third quarter of this year,” said Bart van Opstal of notary federation Notaris. “But if you look at October specifically, it’s only in Flanders that you see such a massive increase. The announcement of the repeal of the tax deduction has had an immediate effect.”

And as you might expect, house prices rose as a result. They are up by 3.2% compared to the first nine months of the year. The price of apartments, however, was relatively stable, suggesting that new home buyers are mostly interested in houses.

Opstal doesn’t expect the trend to continue in November and December because the deduction is dependent on when the notary finalises the sale. Getting that done in less than two months of finding a property and obtaining a loan is unlikely. Notaries are already under pressure to finalise sales this year that were made in October.

The mortgage tax deduction used to exist in Brussels as well, but was scrapped in 2017.

Photo: Koen Fasseur/BELGA