Luxembourg real estate: record price increase in 2018
Real estate prices continue to soar in the Grand Duchy of Luxembourg, especially for apartments. In 2018, the market saw a 7% increase in prices compared to the previous year. According to Engel & Völkers group of experts specialising in residential real estate, price increases have never reached such high levels. Over the last 10 years, this increase has been in the order of 5%.
Rising prices in residential real estate
The increase in prices is most noticeable in the existing apartments’ market . In this sector, the increase is around 10%! Itrepresents an absolute record, especially over a short period of 1 year. New apartments increased “only” by 6% in 2018 compared to the previous period.
House prices have also increased, but less significantly than the apartment market.
Why strong growth in residential property prices?
Luxembourg’s attractiveness in terms of population inflows is the main reason for this. In 2018, more than 11,000 people came to Luxembourg, representing 1.8% of its total population.
The constant increase in the number of Luxembourg residents is no longer in line with the supply of new housing. According to Engel&Volkers, more than 6,000 additional apartments should have been provided in 2018 to cover demand. However, the supply in new units was barely 2,600.
In addition, the very low level of bank interest rates on the market contributes to pushing prices up to record levels.
What about the rental market?
The prices recorded for rentals also increased significantly in 2018. This increase was particularly significant in the Bonnevoie, Gasperich, Merl and Belair districts. There was an increase of 6 to 8% in the Station area alone.