An attractive property market
Luxembourg has seen its property market grow steadily over these past few years. Housing Observatory (Observatoire de l’Habitat) figures show that, between 2016 and 2017, prices of pre-owned apartments grew by 4.7% while the prices of new-builds surged by 6.1%.
This inflation per square metre is good news for buyers who see real estate as a very profitable investment with a 12% increase in transactions recorded for the purchase of existing apartments over the same period.
The growth is also driven by tax incentivesgranted by the Luxembourg government. The first of these is a tax deduction on the purchase of your home (capped at 20,000 euros) and a tax credit on notarial deeds. Transaction costs are limited, property taxes are low and the interest on the mortgage is deductible on your tax return.
Finally, when it comes to insuring your mortgage (outstanding balance insurance), it is also eligible for a tax credit. You are well advised to take it out with your insurance company. The Eric Thill AXA agency in Hobscheid can help you set up your mortgage insurance which, though it may have been made mandatory by the banks, will also enable you to protect yourself and your family in the event of a major disaster.
Prices vary according to the postcode
There is a difference of almost 40% in prices per square metre depending on whether you are located in Luxembourg City or in the north of the country. When looking to buy in the capital, the price per square metre for an existing apartment is around € 6,500. If you move away from the capital, towards Hobscheid in the west, towards the north in Wiltz or towards the east in Echternach for example, the price per square metre drops to € 4,000 on average.
The average price also varies depending on whether you are buying a new-build or pre-owned property. For a new apartment in the capital, the price per square metre can rise to € 7,800.
The best way to follow the market trends is to consult the website of the Housing Observatory.
Buying in Luxembourg. What are the formalities?
To become a homeowner, a personal contribution of 20% of the purchase price is often required.
You then need to take out insurance on your mortgage. This measure, which is systematically imposed by banks, will allow you to protect yourself in times of need.
After finding your apartment or house and signing the preliminary sale agreement, the deed of sale must be drawn up before a designated notary. For more information on this subject, we recommend the website of the Chambre des Notaires in Luxembourg.
So if you are ready to take the plunge and become a homeowner in the Grand Duchy, entrust all your insurance needs to the Eric Thill AXA agency in Hobscheid, 26d, Grand-Rue L – 8372 Hobscheid, tel: 27 39 27 1, email@example.com