Belgian building permit recovery continues, but challenges lie ahead
The recent recovery in Belgian building permits suggests a positive shift for the construction sector, yet significant challenges loom ahead that could dampen this momentum. Per the full note from ing-think, building permits rose by 8% year-on-year in the first half of 2026, predominantly driven by a 12% increase in new construction permits. Despite this growth, the construction landscape remains precarious due to escalating energy prices and rising financing costs, which could counteract progress. Market participants should closely monitor the implications of geopolitical risks, particularly from the Middle East, as they could further complicate the sector's recovery.
What the desk is arguing
The desk emphasizes that the recovery in Belgian building permits is a welcome sign for the construction industry but is tempered by potential headwinds. According to ing-think, the rise in building permits was largely fueled by residential projects, where permits surged by 14% year-on-year. However, softening non-residential renovation activity and external pressures threaten to impede this positive trajectory.
Higher energy costs and increasing financing rates are two key factors that could inhibit further growth. The rise in permits for housing, especially with a stunning 51% month-on-month increase in July, paints a positive picture, yet the desk remains vigilant about economic conditions that may affect future permit activity.
Where it sits in our coverage
Our consensus target for the EUR/USD pair is 1.075, with a range of 1.04 to 1.12, reflecting varying outlooks on the eurozone economic health. Specific targets from the firms include: - jpmorgan: 1.10 for Mar 26 - bofa: 1.04 for Mar 26
This view aligns modestly with jpmorgan, which expects a robust eurozone performance but diverges from bofa, which holds a more pessimistic outlook. The desk’s positioning aligns toward the upper end of the spread, reflecting confidence in a stable recovery in the construction sector.
How other firms see it
The broader market sentiment tends to lean optimistic among firms like jpmorgan, suggesting a favorable outlook for the euro amid construction recovery signals. Conversely, firms like bofa express caution, highlighting potential risks stemming from high energy costs and interest rates.
Particular attention should be given to the housing market's impact on the EUR/USD trajectory, especially as external economic pressures arise. The interaction between building permits and the euro-area interest rate path will merit further scrutiny due to the relationship between construction activity and currency strength.
What the calendar says
No high-impact events are scheduled in the immediate future that could directly influence market movements in this context. However, traders should stay alert to changing geopolitical dynamics in the Middle East, which could have an economic ripple effect on energy prices and construction activity in Belgium.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Building permits in Belgium rose 8% YoY in H1 2026, signaling a recovery.
- 02Renewed challenges from rising energy costs and financing rates could impact future growth.
- 03Residential construction is leading the recovery, particularly in housing permits.
- 04Geopolitical tensions may create additional headwinds for the construction sector.
Market implications
Monitor the EUR/USD pair closely, particularly as it interacts with construction sector data in Belgium. A sustained movement above 1.075 could reinforce bullish sentiment, while any significant geopolitical developments may act as corrective pressure.
Risks to this view
Key risks include a sharp increase in energy prices or a significant rise in interest rates, both of which could stifle construction activity and reverse the current positive trend in building permits.
Articles Belgian building permit recovery continues, but challenges lie ahead Published 11:00 Real estate Belgium Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download After years of declining building permits, the first half of 2026 brought a welcome improvement, with permit activity returning to growth. Despite this rebound, permit volumes remain historically low, and renewed geopolitical tensions in the Middle East add new headwinds for the construction sector Alissa Lefebre Belgian building permit growth strengthened in early 2026, but higher energy prices and rising financing costs could curb momentum Recovery in building permits continues in first half of 2026 The first half of 2026 brought a welcome improvement in building activity, with the number of building permits rising by 8% compared with the same period a year earlier. The recovery was mainly driven by new construction permits, which increased by 12% year-on-year, while renovation permits also posted a more modest gain of 5%.
However, the picture is mixed across market segments. In the renovation market, growth was confined to residential projects, where permits increased by 6% compared to the previous year. Non-residential renovation activity, by comparison, resumed its downward trend since April and is currently 2% lower than a year ago.
In the new construction segment, both residential and non-residential permits recorded growth, although the strongest momentum came from the residential market, where permits increased by 14% year-on-year. Focusing on the residential market, housing permits rose significantly during the summer. In July, the number of housing permits jumped by 51% compared with the previous month, lifting annual growth to 11%.
Both apartments and houses contributed to this increase, with permits rising by 61% and 40% month-on-month, respectively. As a result, apartment permits were 8% higher than a year earlier, while house permits increased by 14%. Another encouraging development is the growing share of apartment permits.
Since March, more permits have been issued for apartments than houses, which is in line with demographic changes and the increasing demand for smaller dwellings. Higher energy prices risk derailing this recovery Higher energy prices feed through to the construction sector, as building materials are highly energy-intensive to produce. According to the Belgian government's construction material price index , building material prices were already up 8% in July 2026 compared with a year earlier.
Some categories recorded even stronger increases: prices for precious and nonferrous metals, for instance, rose by as much as 36%. Rising material costs risk pushing up the price of new homes at a time when demand remains the main constraint reported by construction firms. Higher construction costs add to worsening financing conditions.
Since the escalation of the conflict in the Middle East, both long-term interest rates and mortgage rates have increased significantly, reducing housing affordability. This is already becoming visible in the mortgage market. In the first eight months of 2026, the number of new mortgages fell by around 10% compared with the same period a year earlier.
While construction firms reported an improvement in order books between March and June, this trend has reversed since July. Firms are once again reporting weakening order books, highlighting the fragile nature of the recovery in residential construction. Lower energy prices may provide some relief for interest rates, but a return to the ultra-low-rate environment of the past is unlikely.
With financing costs expected to remain structurally higher, housing demand is unlikely to receive a strong boost anytime soon. In addition, the Flemish government is planning to raise registration duties on the sole family home from 2% to 3%, reversing a reduction introduced less than two years ago. Beyond its direct financial impact, the measure adds to policy uncertainty in the housing market, making it more difficult for households to anticipate the costs of a home purchase and potentially dampening demand further in a housing market that was already expected to lose some momentum in the coming years.
Housing market Energy prices Construction Building permits Belgium Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Alissa Lefebre Economist Alissa is an economist at ING Belgium.
She joined the firm in 2024 and covers the Belgian real estate and construction sector. Prior to this, she was a PhD student at KU Leuven. In this article Recovery in building permits continues in first half of 2026 Higher energy prices risk derailing this recovery
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