Are you planning to move to Luxembourg? Real estate prices in Luxembourg are structurally high due to a shortage of housing. New construction is not sufficient to meet growing demand. Although recent months seem to herald an upturn in the market, new real estate projects continue to stall.
The latest real estate trends in Luxembourg
A slowdown in 2025?
After a year-end 2024 that seemed to herald a recovery in real estate with the fall in interest rates, the first quarter of 2025 appears less promising than expected. Cautious, consumers seem to besaving rather than taking out loans. We'll have to wait a little longer for more reliable figures and, above all, for the consequences of the government's incentive measures, which are valid until September 2025.
Purchase prices fall in 2023 and stabilize in 2024
Real estate sales clearly slowed down in 2023 and 2024. It has to be said that, as a result of rising interest rates, many would-be buyers have had their bank loans refused.
Following on from 2023, the first part of 2024 confirmed a downward trend in purchase prices. Although the last quarter of 2024 saw a recovery in transactions, this recovery was not reflected in prices. On the contrary, developers in particular have finally lowered their selling prices for new-build properties.
Continued rise in rental prices in 2023 and 2024
On the rental market, rents continue to climb. However, the 4th quarter of 2024 finally saw a slight fall in rents, with -3.7% for old houses and -1.9% for apartments compared with the 3rd quarter of 2024. Only the Centre region continues to show rising rents at the end of 2024.
More and more young working people are looking for shared accommodation to reduce rental costs.
You don't want to share a flat? Click here for our tips on how to reduce your housing budget, in particular through rent subsidies.
What can we learn from the Luxembourg real estate market?
Falling sales prices, rising rents
Luxembourg continues toattract a working population in search of work, but also a high-income population. They are looking for a privileged and secure living environment.
However, the housing shortage remains a major challenge for the country.
At the end of December 2024 (source Immotop), national prices averaged €8,261/m², with €10,599/m² for the Centre region. As a reminder, prices had peaked in March 2023 with an average of €9,123/m².
As far as rentals are concerned, asking prices continue to climb, with an average price per square meter of €28.79 in December 2024, compared with €24.91 in February 2023.
Location, a key factor in Luxembourg prices
There are, of course, disparities in property prices across the Grand Duchy. The Canton of Luxembourg is without doubt the most expensive. The average budget for buying a house is over 1,000,000 euros, twice as much as in the north of the country. The further away from Luxembourg City, the more affordable the prices.
In December 2024, prices per m² in the canton of Luxembourg averaged €11,210/m² when buying and €32.81/m² when renting.
Prices vary according to the type of home you're looking for
The surface area and type of housing are determining factors for prices. Overall, prices per m² decrease with the size of the property. It's true that small surface areas play into the hands of investors, who push up the market.
An apartment under construction is 15 to 20% more expensive than an older apartment of equivalent size in the same location. However, investors are starting to lose interest in new-build properties in favor of older ones. Yields are indeed more attractive. Developers are still reluctant to lower their prices. Many developers had to close their doors during this period.
All this information is also very important if you yourself have a property to sell.
What's the outlook for real estate in Luxembourg?
The Frieden government elected in October 2023 has defined housing as a priority for the country.
Today, local authorities are keen to increase the proportion of apartment buildings or two-family homes as opposed to single-family homes. Only 15 of the more than 100 municipalities have a majority of their housing stock in apartments. These include the top three, with Luxembourg City 80% apartments, Esch-sur-Alzette 69.4% and Hespérange 63.1%.
In concrete terms, the stock of single-family homes is declining. The share of apartment buildings in the total number of homes under construction is rising. More and more single-family homes are being replaced by two-family homes and apartment buildings.
But when we're talking about a population of over 1 million by 2050, what are the prospects for the future? To prepare the country for these new residents, we could consider reducing the size of housing units to increase the number on offer. Legislation could also evolve to allow higher occupancy rates, for example, by renting out unoccupied rooms.
But today, it's mainly a question of enticing owners to free up land, when they have no interest in seeing prices fall. According to a recent study by the Observatoire de l'Habitat, 84% of potentially buildable land is owned by around fifty private individuals and companies. The next finance laws should be drafted along these lines.
Against the backdrop of recent trends in the Luxembourg real estate market, it's crucial to understand the nuances of life in the Grand Duchy. Read our in-depth analysis of what life in Luxembourg is really like.
Real estate retrospective of recent years
Luxembourg prices to slow in 2022
After years of overheating, 2022 marks a slowdown in real estate prices , with a year-on-year increase of just 5.6%, a far cry from the double-digit price rises seen in previous years.
Real estate transactions down in number and volume
Sales of new apartments fell by almost half in 2022, while the number of transactions in existing apartments fell by almost 18%. Financial volumes fell by 50.1% for new apartments and 18.7% for existing properties.
Rising rental prices on the Luxembourg market
The end of 2022 is already marking a rise in rental prices. Rental leases signed over the last quarter show a year-on-year increase of 8% for apartments and +6.9% for houses. Less than 13% of rental ads are for houses, and this proportion is tending to shrink further. The market is still very tight, which means that we can expect to see higher rents in the future?
Property prices to rise by more than 10% in 2020 and 2021
The confinement of 2020 and the spread of telecommuting have once again marked the rise in property prices. These years will see the 2019 increase confirmed with housing price rises of 14.5% in 2020 and 13.9% in 2021 respectively.
New construction is on the increase, not only in Luxembourg City but throughout the country. New projects are springing up all the time (see real estate market). But these projects are not enough to stem the rise in prices.
Individuals are looking for exteriors, made indispensable during confinement, and investing in their interiors. At the end of 2021, the average price of a house in Luxembourg will be €1,371,000.
The capital, Luxembourg-City, remains very popular, and prices are skyrocketing even in the surrounding areas. The north of the country is increasingly in demand, thanks in particular to the Nordstrooss (freeway to the north). Prices are still affordable. The south continues to attract, thanks to lower prices and good connections to the capital. A high-speed tramway will link Luxembourg's Cloche d' Or district to Esch-sur-Alzette, via Foetz, in less than a quarter of an hour by 2030.
Price rises in the real estate industry are progressing faster in Luxembourg than in other European countries, demonstrating the growing interest of customers in this destination.
Luxembourg real estate prices to soar for the first time in 2019
The housing figures published in Q4 2019 by L'Observatoire de l'Habitat and Statec confirm the global sentiment. Property prices have soared over the past 12 months. Housing prices have risen by 11% over 1 year, from Q4 2018 to Q4 2019!
This increase is global and more or less homogeneous between the different types of property for sale. House prices are up +9%, new apartments +12.4%, old apartments +12.1%. At the end of 2019, prices stood at €6,057/m2 for existing apartments, €7,145/m2 for apartments under construction.
As for single-family homes, it now costs an average of €789,474 to acquire a property in 2019, an increase of €40,000 in just 2 quarters.
As a result of Brexit and the arrival of foreign workers on the Luxembourg market, the existing imbalance between housing supply and demand has increased. Despite the many projects currently underway, the future supply of new housing is not keeping pace with population growth.
Luxembourg's sought-after districts such as Limpertsberg, Belair, Kirchberg, Grund and Merl continue to offer excellent value for money. Prices in these areas remain in line with expectations. In the rest of the country, development is accelerating in the south. In the west, the community of Steinfort is regaining its appeal thanks to investment in infrastructure projects. The north of the country is finding new interest thanks to the development of road transport networks. Prices remain more affordable. The communes of Ettelbruck, Diekirch and Wiltz are the most dynamic today.
Free public transport means that real estate located close to the network increases in value.
2018: Luxembourg's real estate boom continues
In 2018, the market saw a record 7% rise in prices compared to the previous year. According to experts specializing in residential real estate, over the last 10 years, this increase was more in the order of 5%.
Price rises are most obvious in the older apartment market. In this sector, the increase is close to 10%! New apartments, on the other hand, rose by "only" 6% in 2018 compared with the previous period. House prices have also risen, but less significantly. This price growth is widespread across the country, particularly in the south, where prices are rising rapidly.
Luxembourg's attractiveness in terms of population inflows seems to be the main explanation for this price rise. In 2018, more than 11,000 people moved to Luxembourg, representing 1.8% of its total population. The steady increase in residents is no longer in line with the supply of new housing. In 2018, more than 6,000 additional apartments would have been needed to meet demand. Yet the supply of new units was barely 2,600. What's more, the very low bank interest rates offered on loans are supporting demand for property acquisitions. This is helping to push prices up to record levels.
Rental prices also rose significantly in 2018. This increase was particularly noticeable in the Bonnevoie, Gasperich, Merl and Belair districts. There was a 6-8% rise in the Gare district alone.
2017: the start of the Luxembourg real estate boom
Whether old or new, property prices in Luxembourg jumped in 2017 by 4.10% for houses and 4.70% for apartments. These figures peaked at 6.10% for properties under construction. At this point, a new apartment is valued on average 25% to 30% more than an old apartment of the same surface area. The average price of an apartment was €420,000, compared with €690,000 for a villa.
The joint report by L'Observatoire de l'Habitat and Statec (Institut National de la Statistique et des Etudes Economiques) was unequivocal at the time. The Grand Duchy appeared to be a safe bet, highly prized by investors. The high quality of its real estate and its attractive tax system make Luxembourg an attractive place to invest. In 2017, the volume of transactions rose by +12% throughout the country.
Find out more about accommodation in Luxembourg.
Find out more about the housing subsidies available in Luxembourg
Source: Observatoire de l'Habitat - Liser
Photo credit: Liser
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