Prices continue to fall on the Luxembourg real estate market. Information confirmed mid-week by the Habitat Observatory.
There is no possible interpretation: the Housing Observatory announced on Wednesday a new general drop in housing prices. It is estimated at 8.3% over one year. This concerns both existing apartments (-9.5%), off-plan properties (-4.3%) and old houses (-9.9%). The trends remain the same.
Prices of existing properties continue to adjust and we are still slowing down on the new market. Race results: the number of transactions is up sharply on the old apartment market (+30.5%) while activity continues to fall on new apartments (-10.5%).
The Habitat Observatory also emphasizes that the drop in prices on existing properties has helped to fillat least in part, the loss of purchasing power generated by rising interest rates. This was not the case for new properties, quite simply because the drop in prices was less significant (-7.7% between the third quarter of 2022 and the 2nd quarter of 2024). To this are added uncertainties linked to the final price and delivery date of new goods.
We must also take into account what the Habitat Observatory defines as “technical carryover effects“from sales of apartments under construction to existing apartments. We are referring here to VEFA properties which were marketed in traditional sales contracts after the completion of the building. A trick that many promoters have resorted to over the last 18 months.
Where are house prices?
Although activity has progressed quite significantly in the house sales segment in the second quarter of 2024 (+33.8% year-on-year), this did not prevent prices from falling (-9.9%). According to the latest calculations from the Habitat Observatory, this brings the average price of a house at 1.26 million euros in the Canton of Luxembourg.
This average varies greatly depending on where the property is located and this is obviously the distance from the capital which is determining. We see, for example, that the average price of a house in the south of the country is 741.62 euros while it amounts to 966,446 euros in the east of the Grand Duchy.
Currently, by opting for a fixed rate over 30 years it would therefore be necessary to provide a monthly payment including between 3,300 and 5,500 euros to buy a house in Luxembourg. This says a lot about the level of salary one must have to be able to access the “Luxembourg dream”.
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