The Belgian Housing Market in Permits: Why Classic New Builds Are Plummeting and 'Vernieuwbouw' (Demolition-Rebuild) and Renovation Are Becoming the Norm
Anyone who analyzes the figures for issued residential building permits (source: statbel.fgov.be) in Belgium immediately sees that we are in a fascinating, yet challenging period. In recent years, we have seen a sharp decline in the number of permits, whereas in the past we recorded remarkable peaks. What is going on in our real estate market? Is it a purely economic story, or are other forces at play, such as the famous 'bouwshift' (spatial shift)? PropertyWeb.be dived into the data.
The Free Fall of Recent Years (2021-2025)
When we focus on residential real estate and disregard office and industrial buildings, the trend of the past four to five years is undeniable: a sharp drop.
Looking at the national figures, we see that in 2021, about 31,900 permits were issued for new residential buildings. By 2025, this number has plummeted to barely 21,400. That is a decline of more than 30 percent. An important nuance: this nosedive is almost entirely due to the crash of classic new builds (building on previously undeveloped 'greenfield' plots). We also see a decrease in pure renovations, albeit a less drastic one, with a 26 percent shrinkage over the same period.
How do we explain this sharp decline? The cause is a toxic cocktail of macroeconomic factors. From 2022 onwards, mortgage rates skyrocketed. Borrowing money suddenly became significantly more expensive, heavily shrinking the average Belgian builder's budget. At the same time, the aftermath of the pandemic, disrupted supply chains, and the energy crisis drove the prices of building materials to unprecedented heights. Finally, general inflation made households more cautious about massive investment projects on empty building land.
The Rollercoaster of the Past: The Peaks of 2006, 2014, 2016, and 2018
Anyone looking at the historical data will stumble upon some strange, steep peaks in the number of issued permits. Especially around October 2006, May 2014, May 2016, and August 2018, the graphs suddenly shot up.
Were these moments of unprecedented economic boom? Not exactly. These peaks are a typically Belgian, and especially Flemish, phenomenon that we call the anticipation effect.
They coincide perfectly with the tightening of energy requirements, such as the E-level and EPB standards. The very first introduction of the EPB regulations, the E100 standard, took place at the end of 2006. In 2014, there was a tightening of the E-level to E60. Two years later, in 2016, came the tightening to E50. Finally, in 2018, there was the severe tightening to E40 and the introduction of the new S-level for the building envelope.
Every time the government announced that the rules would become stricter on January 1st of the following year, a true 'rush' on building applications occurred in late December. People wanted to submit their files quickly under the old, more lenient, and cheaper rules. Because it takes several months for an application to be processed and approved, those December rushes invariably translate into massive peaks of issued permits in the spring and summer of the following year.
The 'Bouwshift' and Concrete Stop: Moving Away from Classic New Builds
Besides the economic reality and the energy requirements, there is a third major player on the market: spatial planning. In Flanders, the term 'betonstop' (concrete stop), now nuanced to 'bouwshift' (spatial shift), was launched. The goal is that no extra open space may be developed by 2040.
Does this have a measurable impact? Absolutely. Local authorities have become much stricter in recent years in issuing permits for new subdivisions or detached houses in open areas, the so-called ribbon development. As a result, building land is becoming extremely scarce and expensive.
The data flawlessly confirms this transition. Where new builds and renovations played leapfrog for years, we have recently seen a tipping point. In Flanders, more new build permits were still issued in 2021, with a total of 23,543, compared to 21,794 renovation permits. Today, that ratio has completely reversed in favor of renovation.
The Shift to 'Vernieuwbouw' (Demolition and Reconstruction)
More and more builders and professional real estate developers today are resorting, out of necessity but also very consciously, to the purchase of existing, older homes on already developed plots. Because classic building plots are becoming unaffordable, they generally use two strategies:
- Major Renovation: Completely gutting the house energetically, keeping the foundation and exterior walls, but otherwise fully adapting the building to current standards.
- Demolition and Reconstruction (Vernieuwbouw): Simply demolishing the old buildings to replace them with a hyper-modern new build. (Note: in official statistics, this counts as 'new build', but in practice, it is urban renewal replacing renovation).
What makes both of these routes so financially attractive is the substantial tax concession. For both major renovations and demolition/reconstruction, you can benefit from a reduced VAT rate of 6% in Belgium, instead of the standard rate of 21% that applies to classic new build projects.
Comparison of Conditions for 6% VAT
| Criterion | Demolition and Reconstruction | Gutting & Renovating |
|---|---|---|
| VAT rate | 6% | 6% |
| Age of property | All ages (will be demolished) | Older than 10 years |
| Max. surface area? | Yes (max 200 m² for individuals, max 175 m² for project developers) | No (unlimited) |
| Sole and own home? | Yes (mandatory for at least 5 years) | No (can also be a second home or investment) |
The Flip Side: Is Demolition and Reconstruction Truly Sustainable?
Developers today very often opt for total demolition and reconstruction because recent legislation allows them to sell their new apartments (up to 175 m²) advantageously with 6% VAT to private individuals. From a tax perspective, pure renovation is often riskier and structurally more complex.
Although this is a blessing for the real estate market, criticism from ecological corners and the heritage sector is growing louder. They speak of a 'perverse incentive' that contradicts the principles of the circular economy. The government focuses entirely on the future energy consumption of the new home (the E-level), but ignores the massive 'embodied carbon' (grijze energie). This is the enormous amount of CO2 emissions associated with demolishing a building, removing debris, and producing entirely new materials such as cement and steel. By rewarding the wrecking ball just as heavily as a renovation from a tax perspective, characterful buildings and usable materials are rapidly disappearing from our streets.
Regional Differences: Flanders, Wallonia, and Brussels
Although the downward trend can be felt nationally, the regions each tell their own story.
Flanders is the epicenter of the new-build shrinkage with a 32 percent drop since 2021. Here, the effect of the spatial shift is most strongly felt, and the renovation market has definitively overtaken the new-build market.
Wallonia is also taking hits, with 36 percent fewer new builds since 2021. Wallonia has historically always had a higher ratio of renovations compared to new builds, partly due to an older housing stock in certain provinces and a different income distribution. Today, the number of renovation permits in Wallonia effortlessly exceeds new build permits.
The Brussels-Capital Region is a completely different story. Due to the absolute lack of free building land, classic new builds are a marginal factor of only around 100 to 200 buildings per year anyway. The real estate market there is 90 percent driven by renovation and transformation projects.
Conclusion for the Future
The data does not lie: the glory days of the classic, detached new build on an empty plot of land seem to be definitively behind us. Driven by expensive loans, high material costs, and a compelling spatial and ecological agenda, new builds in the future will almost exclusively mean 'vernieuwbouw' (the demolition and reconstruction of outdated buildings). At the same time, the rest of the private real estate market is transforming at a rapid pace into a pure renovation market.
For the investor, builder, and buyer on PropertyWeb.be, the message is clear: the opportunities of the future lie in the repurposing, sustainability, and renewal of the existing housing stock.
Do you have questions about the feasibility of your renovation project or are you looking for properties with potential? Discover the offer on PropertyWeb.be.
