The Observatoire de l’Habitat in Luxembourg and Statec have just published the latest housing figures for the 2nd quarter of 2019. These confirm the overall feeling of a price increase over the last 12 months. Housing prices rose by 11.4% over 1 year, from the 2nd quarter of 2018 to the 2nd quarter of 2019!
This increase is global and homogeneous between the different types of housing for sale: houses (+11.8%), new apartments (+11.5%) or old ones (+10.7%). Prices now stand at 5,742 €/m2 for existing apartments, 6,646 €/m² for apartments under construction. As for single-family homes, it is now necessary to pay 742,335 euros to acquire a property.
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.
Today, we can see that an apartment under construction is 15 to 20% overpriced compared to an old apartment of equivalent size and located in the same place. Buying a property: newly built or existing?
Thus, an apartment of less than 50m² new will cost on average 7.969 €/m² in new buildings compared to 6.871 €/m² in old ones. An apartment of 130 m² and more will cost on average 6,316 €/m² in new buildings compared to 4,855 €/m² in old ones.
Prices per m² in the canton of Luxembourg are on average 8,571€/m² for new buildings and 7,893 €/m² for old ones. These are to be compared with the prices in the north of the country at 4,829€/m² in new buildings and 4,277 €/m² in old buildings. Between the two, prices decrease between the Capellen/Mersch region, the East region and the Esch-sur-Alzette region.
As far as houses are concerned, it will take on average 1,157,621 euros to acquire a house in the canton of Luxembourg, 791,127 € on Capellen / Mersch and 541,756 in the north, less than half!
Measures aiming at giving a little oxygen to a real estate market in need of offers (real estate capital gains taxed at a reduced rate until 31 December 2018) have now been completed. We can consider that the objective has been achieved. Indeed, after an increase in transactions in 2018 to anticipate the end of this measure, the number of transactions fell sharply in the first quarter of 2019. Transactions resume in the 2nd quarter of 2019. We can therefore expect that the rest of 2019 will continue to be as dynamic as ever.
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 recent working group organised by OLAI 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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