This increase is global and more or less homogeneous between the various types of housing on sale: houses (+9%), new apartments (+12.4%) or existing (+12.1%). Prices now stand at 6,057 €/m² for existing apartments and 7,145 €/m² for apartments under construction.
As for single-family houses, it now costs an average of 789,474 euros to acquire a property, i.e. 40,000 euros more in just 2 quarters.
Differentiated prices according to the type of accommodation required
The location of properties remains a determining factor for prices, as well as the surface area or type of housing. Overall, prices per m² decrease with the size of the property. It is a fact that small surfaces are the game of investors who pull the market upwards.
Thus, an apartment of less than 50m² will cost an average of 8.640 €/m² in new construction compared to 7.349 €/m² in existing building. An apartment of 130 m² and more will cost on average 6.599 €/m² in new construction against 5.144 €/m² in former construction.
The prices per m² in the canton of Luxembourg are on average 9.203 €/m² in new and 8.495 €/m² in ancient. These are to be compared with prices in the north of the country at 5.227 €/m² for new buildings and 4.424 €/m² for old buildings. In between, prices decrease according to the region of Capellen/Mersch, the East region and the region of Esch-sur-Alzette.
As far as houses are concerned, it will take on average 1,207,225 € to buy a house in the canton of Luxembourg, 848,777 € in Capellen / Mersch and 563,470 € in the north, less than half compared to the main town of Luxembourg.
Land prices have clearly contributed to the rise in new home prices in particular. This increase is all the more important in urban areas and is stronger since 2018. On average, housing prices have increased by 5.7% since 2010, while the price of building land has increased by 7.0% annually over the same period 2010-2019.
While the measures aiming at giving oxygen to a real estate market in shortage of supply (capital gains taxed at a reduced rate until 31 December 2018) have now been completed, it can be considered that the objective has been achieved. In fact, after an increase in transactions in 2018 intended to anticipate the end of this measure, the number of transactions in 2019 on old apartments fell sharply (-22% in number and -11.8% in volume over 1 year) while transactions on new apartments are up by 13.8% with a financial volume up by 28.8%.
Only 15 communes out of more than 100, have a majority housing stock of apartments. Among them, the top trio with the city of Luxembourg 80% of apartments, Esch-sur-Alzette 69.4% and Hespérange 63.1%. Nevertheless, it can be seen today that the stock of single-family houses, which are widely represented with 82.8% of buildings for residential use, is decreasing. On the other hand, the share of apartment buildings is on the rise in the total number of dwellings under construction with 15.9% since 2001 against 6.7% before 1919.
But at a time when we are talking about a population of more than 1 million people in 2060, what are the prospects for the future? A working group organised by OLAI in 2019 with the presence of the Minister of Family and Integration, Corinne Cahen, established that it was essential to take steps to prepare the country to welcome these new residents. Possibilities could be explored, such as reducing the size of housing units. The objective would thus be to have a larger housing stock, while the country is short of supply in response to demand. But it is above all a question of seducing landowners to free up land, when they have no interest in seeing prices fall. This could be done through administrative facilities. Legislation could also evolve to allow higher occupancy rates for housing, such as the rental of unoccupied rooms.
Source : Observatoire de l’Habitat – Liser
Photo credit : Liser
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