Explorative Short-Term Predictive Models for the Belgian (Energy) Renovation Market Incorporating Macroeconomic and Sector-Specific Variables

Abstract

Retrofitting existing buildings is a cornerstone of Europe's strategy for a sustainable built environment. Therefore, accurate short-term forecasts to evaluate policy impacts and inform future strategies are needed. This study investigates the short-term predictive modelling of renovation activity in Belgium, focusing on overall renovation activity (RA) and energy-specific renovation activity (EA). Using data from 2012 to 2023, linear modelling was employed to analyze the relationships between RA/EA and macroeconomic indicators, market confidence, building permits, and loan data, with model performance evaluated using Mean Absolute Percentage Error (MAPE). Monthly data and time lags of up to 24 months were considered. The three best-performing models for RA achieved MAPE values between 2.9% and 3.1%, with validated errors ranging from 0.1% to 4.1%. For EA, the best models yielded MAPE values between 4.4% and 4.6% and validated errors between 8.9% and 14%. Renovation loans and building permits emerged as strong predictors for RA, while building material prices and loans were more relevant for EA. The time lag analysis highlighted that renovation processes typically span 15-24 months following loan approval. However, the low accuracy observed for EA underscores the need for further refinement. This explorative effort forms a solid base, inviting additional research to enhance our predictive capabilities and improve short-term modelling of the (green) residential renovation market.