Luxembourg's statistics service Statec published figures on housing prices and the related poverty risk on Tuesday.

Statec's findings are perhaps not the most surprising. The steady increase in housing prices is causing issues with affordability and above all, penalising those on lower incomes. The latest study shows that real estate prices have been rising by 'nearly 5.4% per year' since 2011.

Whilst that figure might be good news for homeowners seeing their property value rise, the story is different for individuals with modest incomes. For the latter group, housing accounts for more than half of their disposable income.

The issue is also linked to making the risk of poverty more prevalent. According to Statec's calculations, 24% of the population is at risk of poverty after the deduction of housing costs. In 2017, only 15.4% of the population was at risk of poverty.

Further to that, the service has also demonstrated that individuals who previously were not at risk of poverty have found themselves closer to the poverty line due to the costs of housing over the past few years.

Statec broke down this demographic into three groups, namely:

  • Luxembourgers and adult households without children who have experienced a moderate increase of their poverty risk rate;
  • Homeowners with loan repayments, managers, and intermediate professionals, all of whom have seen their at-risk-of-poverty rate more than double;
  • Employees, blue-collar workers, single-parent households, and those living in households made up of two adults and children. This group already found itself at risk of poverty, but is then put in an aggravated situation once housing costs are taken away.


© Statec

Statec's conclusion is certainly an alarming one given the fact that the housing market's increase does not seem to be slowing down at all.