Luxembourg Housing Market: A Comprehensive Analysis

Overview

The latest report from the Housing Observatory in Luxembourg has revealed a significant 8.3% drop in housing prices over the past year. This decline has impacted various categories, including existing flats, properties under construction or sold off-plan (VEFA), and older houses.

Key Findings

• Existing flats experienced a price drop of 9.5%
• Properties under construction or sold off-plan (VEFA) saw a decline of 4.3%
• Older houses recorded a significant drop of 9.9%
  

  Market Trends
  

• Transaction volumes have increased for existing flats by 30.5%
• New-build sector activity has decreased by 10.5%
• The price drop in existing properties has helped offset the impact of rising interest rates on purchasing power
• The new-build market has only experienced a modest price decline of 7.7% between Q3 2022 and Q2 2024
  

  Technical Carryover Effects
  

  The report also highlighted "technical carryover effects," where properties initially marketed as VEFA were later sold as existing flats after completion. This strategy has been adopted by many developers over the last 18 months.

  House Prices
  

• Despite a 33.8% increase in house sales in Q2 2024, prices have continued to decline
• The average price of a house in the Canton of Luxembourg City is now €1.26 million
• Price variations exist based on location, with average prices ranging from €741,620 in southern Luxembourg to €966,446 in the eastern part of the Grand Duchy
• Homebuyers opting for a 30-year fixed-rate mortgage could face monthly payments ranging from €3,300 to €5,500, depending on the property’s location
  

  Analysis
  

  The ongoing decline in housing prices in Luxembourg reflects a complex interplay of market dynamics, economic factors, and consumer behavior. The shift towards existing properties over new-builds signifies changing preferences and affordability concerns among buyers. The technical carryover effects highlight the strategic decisions made by developers to navigate market conditions.

  For potential homebuyers, understanding these trends is crucial for making informed decisions about property investments. The affordability of housing, influenced by price fluctuations and mortgage rates, directly impacts individuals’ financial planning and long-term stability. Keeping a close eye on the housing market trends can provide valuable insights for navigating the real estate landscape in Luxembourg.