Falling prices, falling interest rates, extension of tax aid, banks willing to grant “more” credits: according to the CEO of the Association of Banks and Bankers Luxembourg, Jerry Grbic, this is the ” good time to buy.”
After two years of convalescence, the real estate market seems to have regained color in recent months. If VEFA is still in difficultyon constate a significant recovery in the existing segment. A recovery due to a particularly favorable environment for the purchase of housing in the Grand Duchy.
Between falling interest rates, falling market prices et the extension of tax assistance, many buyers have found what they were looking for over the last six months. A trend confirmed by the CEO of the Association of Luxembourg Banks and Bankers, Jerry Grbic who affirms that “all this has strengthened purchasing power”.
According to the director of the association which brings together 122 banks established in Luxembourg, as well demand for credit agreements is on the rise at the end of the year. And for good reason, the price of existing housing has fallen on average by 20% and the ECB recently lowered its main key rate to 3%.
The new home market still in an impasse
“We found the floor”, he comments before hastening to add “in the existing”. Indeed, the situation is far from being resolved on the market something new that remains”almost at a standstill” confirms Mr. Grbic. But all hope is not lost since, according to him, the interest is still there. However, “buyers must be able to buy“.
And it will inevitably pass by a fall in prices or… by a further fall in rates. A fall predicted by most economists during the year 2025. “Almost a percentage point“confirms the CEO of the ABBL who adheres to these forecasts. This would carry the main key rate of the ECB at 2% and would have a significant impact on the borrowing capacity of buyers in Luxembourg.
Enough to allow developers to maintain high prices? Possibly. For his part, Jerry Grbic believes that he “remainder of the margin on the VEFA“. In other words, prices could still be adjusted. Whether or not this happens, the extension of tax aid that was due to be revoked by December 31 could play a major role in the months to come.
Right time to buy?
The renewed interest in the Luxembourg real estate market in recent months has prompted the government to grant a reprieve to the 2024 housing package. “The government has understood that we must not 'break' this dynamic.” believes Mr. Grbic. And with prices stabilizing on existing apartments and rising on existing houses, he believes that it is “objectively the right time to buy“.
“This is a good time for those interested in purchasing“, he continues. Especially since banks want to grant credit“It’s their profession.” recalls the CEO of the ABBL. And with the downward trend in rates, it would be the time to bring in the competition, he suggested. Because if the rates are no longer what they were, “historically, 3-4% is not very high“.
Indeed, after a decade of low rates, it is “an entire generation (up to 35-38 years old) has not experienced financial commitments with high rates“, underlines Mr. Grbic. The drop in prices is also “a consequence” of adjustment to what he describes as a “new reality“. Because, like many other experts in the sector, he cannot imagine that we will return to the rate levels that we experienced before 2020.
We also discussed the financial results of banks in Luxembourg in 2024of Prolog Luxembourg SA et from the Aides.lu platform with the CEO of the ABBL. The details of our discussions can be listened to by clicking on the audio at the top of this article. You can also find the show on RTL Play by clicking below or on Apple Podcast and Spotify.
