The impact of changes in dwelling characteristics and housing preferences on Belgian house prices

This paper develops new hedonic house price indices for Belgium and analyses the impact on prices of changes in dwelling characteristics and housing preferences.

House prices rose very strongly in the first COVID year and this increase was not driven by changes in the quality of the property sold: there has not been any significant increase in dwelling surface or garden size, for example, compared to the houses that were sold prior to the pandemic. Price growth continued to be slightly higher in cities than in their rural-urban fringe and residential commuter belts and it also continued to be higher in cities with a large share of highly-educated young adults.

Turning to the longer term, we show that the price of an identical house has increased by 7 % less over the past decade compared to the average price of the houses sold. This divergence is mainly the result of improvements in the energy quality of these houses sold. This energy efficiency will in addition need to improve a lot more to reach the European climate goal of having an energy-efficient building stock by 2050. We also find that the price premium for energy-efficient houses is high and has risen over the past decade.