[Calculation and visualization](https://medium.datadriveninvestor.com/why-its-difficult-for-young-people-to-buy-a-house-c931c972664b?sk=4565515147c887309fddcfbbe0785ff2) of how a lot of young Belgians are playing catch up with rising real estate prices
25 comments
But I can’t aks my boss for more salary now can I? That would be mad, cutting into his profit like that.
Am I out of touch, or does € 245.000 not cut it to get a house?
For that price of 245.000 EUR, you can maybe get a small apartment where I live and that’s it. So even that’s impossible without support.
If you would think about having a place with enough space to raise a family, you’re competing against boomers who don’t mind bidding 100k over the asking price.
Meanwhile [https://www.vrt.be/vrtnws/nl/2021/10/18/fiscaal-voordeel-voor-tweede-woning-blijft-bestaan-en-dat-doet-e/](https://www.vrt.be/vrtnws/nl/2021/10/18/fiscaal-voordeel-voor-tweede-woning-blijft-bestaan-en-dat-doet-e/)
They should buy less coffee !
Whilst the demand for houses is still strong, I’m guessing that the increase in interest rates and at least the reforms of the flemish government that makes buying a second, third,… property more expensive will dampen the price growth in the future.
Look, here’s the reality.
House prices have gone up much more than inflation has. The main reason for that is because demand is always there. Be that from young people, slightly older people, investors, financial funds, governments institutions…
If demand is always there, then the price will naturally move to the highest possible point where *someone* can still pay it. And there is always a someone since people believe that house prices will *never* go down. Meaning that no matter what you pay, you believe that it is a good investment.
So it doesn’t matter how expensive a house is, as long as you can just afford it you will buy one. Even if it is not that great, or you need to bid on one that you don’t love. After all, you believe prices will never go down so no matter what you pay now will be a good price in the long run.
What does this mean?
That making more money, saving more, getting more help from families, intergenerational purchases… keep prices high. Because they make it clear there is a demand at that price.
In other words, it is our unshakable belief in the eternally increasing value of a house that is causing this. To Belgians, there is nothing more important as an investment than “owning your own house”.
Belgians have very little faith in the government or the markets, that is why we put so much money in savings accounts. That is why we need to own our own house.
How do you fix this?
You can’t fix this without a serious and painful recession. A situation where nobody can get a mortgage and houses just remain on the market for years. And even then, people will cling to their house. Because after all, even when the value plummets, they can still live in it. And recessions don’t last forever.
Houses will always be expensive as long as the demand is there.
I do see what this guy is trying to prove, he is using the wrong facts. (playing with the numbers to prove his point).
Taking a median priced house, with a “low” salary.
Median salary in Belgium is around 3.5K gross, which is +/- 2.2K net.
[https://statbel.fgov.be/en/themes/work-training/wages-and-labourcost/overview-belgian-wages-and-salaries](https://statbel.fgov.be/en/themes/work-training/wages-and-labourcost/overview-belgian-wages-and-salaries)
Remember how in 2020 when everyone was confined to their house during the pandemic? A huge surge happened in demand for houses with a garden, I’m guessing that didn’t really help with the prices.
Because the fucking avocado industry
Median price is €245,000?
what is this 2010?
Well my house is for sale for 340 000 which is the actual value these days and it got listed as such ( It’s a newly build home 6 years old and a epc value of 48. 3 bedrooms and a huge attic which you can turn into 2 more bedrooms or whatever you want). Haven’t gotten any bids yet cause I don’t think anyone can pay it so well be dropping the price soon. Loans skyrocketing the last few months really is hurting. Gone up at least 1 % which means alot of money extra over 20 years to pay back. This is in Oostende btw.
Extra info we bought the house 6 years ago for 285 000. That’s how much it has gone up in value over that time.
I started small 6 years ago with a house for 164k. I obviously had to renovate it a bit. I couldnt afford a full renovation without an extra loan so i did some works here and there. Region Kortrijk, not the most expensive in this country by far i must add.
I just sold it for 200k to another young dude that will continue to renovate it and bought a new house of 370k. Our financial situation is nowadays much better so we can afford it. My brother has a similar story but stayed in his house after the renovations.
I had to make some sacrifices and work hard but overall i wouldnt call it impossible or difficult. I dont have a higher degree, i didnt get any money from parents. I did start working at 18 so i had a bit of a headstart compared to people who studied 3 or 4 years tho.
Try to stay realistic. A small flat or to be renovated house isnt the end of the world and meanwhile you dont need to pay rent, you pay off the mortgage for yourself. Electricity and heating is the most important. Looks can wait.
Well the article goes into this, but i think most people are still talking about the shown graph.
This is the graph if you only save 20% of your income (1700 at the start). That’s 340 euro per month. Of course you can’t save shit with that saving rate.
I think it should be your right to buy a house when you’re alone, but it’s not your fucking birthright. Buy with someone and save a little more aggresively (500 euro per person) and you’ll be able to buy a house in 5 years. If any one of your parents or grandparants give you a small loan, you can even get there faster.
Is there something wrong with the housing market? You betya. Is there something wrong with people’s attitude? Hell yes.
I understand his point and it’s clearly true up to some point. BUT on the other hand it’s relatively normal that someone with a below average salary would only be able to buy an average house after a lot of time (as is described in his example).
I think it is time for the government to interfere in the open market here… Young hard working people cannot afford houses while investments firms are allowed to buy up en masse – this is not right. Do we want to end up in a situation where even couples with median jobs have to rent forever?
Then there rises tbe question.. if you’re able to loan up to 80 to 90 percent. The amount you have to pay off from your loan could be a high amount where renting something could be more interesting.
Just gonna throw out my current situation.
I am 27M and I just signed for a plot of land. The thought is to arrange the building of the house myself (with the help of my dad).
To get a plot of land there usually is a loting so you can choose what plot of land you can have. Most plots in my area where around the 250m^2 – 300m^2. I was assigned position 2 to choice but ended up becoming position one since the person on position 1 didn’t show up. But the crazy part was that nobody except me showed up. So I alone got to choice what I wanted between 26 plots. What is something I do not understand, is there really nobody of my age in my area who wishes to build out the house themself.
My plot (260m^2 semi-open build) costs about 86K in total. There are a bunch of rules to get the deal done. Like I don’t have to cough it up immediately, but in general it is expected that I come up with a plan in 4 months. And then I get 8 months to get wheels in motion. The house has to be wind and watertight in 5 years so there is a lot of play room.
As for savings, I have plenty saved because I live with my parents. I know this is luxury position. But since I have no relationship and a good bond with my parents so this was the best option for me.
As for getting a loan. This is still a big question, worst scenario the entire plan fails and I get fined 3.500 euro but I think that’s acceptable sine I do not plan to fail.
As for the plan. Well it sounds simple in my head (and I know it possibly won’t be). But my steps are laid out as followed:
1. Find ground (SUCCES)
2. Get a “cheap” plot (EHM success?)
3. Find an architect and try to build the basics in my budget (in progress)
4. Get loan (in doubt)
5. Pay the ground and basics home (scares the living shit out of me)
6. Finish the home on my own tempo while still living at my parents
7. I am homeowner now? (wow)
As for what constitutes as basics. This is the house with windows and doors + designated spots for utilities. Maybe even getting electricity and water hooked up assuming all of that can be financed in a year.
And at this point well, I also usually love to jump the complain train. Also since I can’t imagine how people that don’t have the luxury to stay home with their parents afford all of this. But not this day, I am just gonna throw everything I have on this. This includes money but most importantly my own time. In Belgium we have the luxury of having a lot of off days. I am gonna use my off days to help out with building the house. The less time a contractor is working on my house the more money I save. Money is the only limiting factor, time is the only resource I am rich in!
Damn… I’m fucked
Fyi, for Flemish people, you can take a loan at the Vlaamse Woingfonds for 100% of the loan. When you get a loan at the Vlaamse woningfonds the notary costs are halved. So for a house costing 200k you’d only have to pay 10k up front in taxes and notary costs with the lowered registratiekosten.
I did this last year. I saved up during the lockdown and bought a house in Antwerp. Yeah, it’s not in the center, but I’ve got my own house now. My parents lived in a rental apartment living paycheck to paycheck. I’m in my twenties and can buy a house, on my own no less.
The government incentives are there, it’s very doable. If you live in Flanders that is.
One of my favourite quotes, from Bill Gates:
>“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”
The article is alright, but it’s written with a glass-is-half-empty mindset. What you might as well take away from it, is that owning your own property is still very much achievable in Belgium for an average youngster, despite these crazy market conditions. The “potential actions” listed are not that unimportant…
Even if it takes, say 10 years, and assuming you start working & saving at age 21 starting with nothing (unlikely, because I assume most people at that age already saved some money from student jobs), then you’re still only 31 when you buy your first home. Which is about the age I was when I bought my first home. In my twenties the thought never occurred to me I should be entitled to *owning* property without saving up for it first.
I said it before and I’ll say it again.
It’s the boomers who keep throwing absurd amounts of down payments to the real estate market be it for themselves or for their children.
Just imagine if you would only be allowed to strictly lay a max down payment of 20%…
This would imo bring the market back to natural prices.
The snowball effect generated by both the high down payments from rich boomers and the extreme taxation on salaries make Belgium a hellhole to compete for a first home in the real estate market.
Nowadays you need to live at home and save for 5 years or get sponsored so you can lay 100k minimum as a down payment to get anything decent (not needing renovations, fairly spacious) with a 20y loan horizon.
Another explanation you often time hear is ”young people want too much” but come on now, if you need a loan for 20y to afford a small studio with an average income of 2k/m that same explanation loses credibility.
These politicians won’t do anything about it because they’re so heavily invested in real estate themselves and they have the money to be sure their kids will too.
just buy a house 4Head
I see multiple problems with this analysis:
– the Belgian median house price isn’t a good starting point, a house in Flanders or Brussels costs a lot more than in Wallonia
– These calculations don’t take inflation into consideration. If you get a 3% salary increase and there’s 2% inflation that year, then your increase is really only 1%
– The final suggestion is kind of ridiculous imo
>Starting salary of €2,000 (instead of €1,700)
>
>Salary increases of 5% (instead of 3%)
>
>Monthly savings of 25% (instead of 20%)
>
>6% investment return on savings (instead of 0%)
>
>€25,000 help from parents at time of purchase (instead of €0)
You can’t expect someone to just gain an additional 300€ a month, have a higher salary increase rate and have their parents dump their savings into them.
In conclusion: the reality is even worse than this article makes it out to be.
Remarks on these maths and the general article:
1) This assumes that a single person should be able to afford a **house** at a young age. Essentially, the market is organized in such a way that small entry apartments should be available for young people who don’t have a spouse or children.
2) These maths assume that the person will be working for EUR 1.700 a month for all this time. It is a bit unfair to assume that these people won’t get any raise at all in 14 years. In fact it makes an enormous difference, especially for people with a higher degree who generally go up in wage at a pretty rapid pace in the current market.
3) They then follow with the below:
>At an expected median house price of €424,000 in 2036 and net salary of €2,570, you will only be able to borrow €304,000 (assumed loan duration of 25 years and interest rate of 2%), while you need €382,000 (= 90% of €424,000).
A single person with an average income **should not be able to buy** a median house since a young single person is by far not a the “median” of our society.
4) I think he deliberately used a price of EUR 245.000 because you get a significant discount on inner-city real residential real estate (in form of lower registration fees) that costs EUR 240.000 or less.
***So yes, it is hard for a young person with a low wage in an entry job who doesn’t climb his way up at all during 14 years, doesn’t have parents who can help him and chooses to be single forever to buy a house that isn’t meant for a single person in the first place.***
I’m considering going freelance because I refuse to get a partner just to have a house. It’s kinda insane though, that’s a risk I wouldn’t have considered in the past. Now ofc we only have one life so might as well take a shot at it. It’s probably a good sign my self confidence has increased. But at the same time it’s kinda bad a person would need to do this. I’m also aware of having privilege in having an education and experience that I can attempt my own stubborn plans. And that’s what keeps bothering me. Housing should be a basic right. And housing for singles should be more than a shitty flat. The space is fine, sure. But the being boxed in with others? Ugh. Maybe that’s a me problem though. At least I could buy one. But it sure would be nice if a small free standing home for singles wasn’t considered such a decadent dream.