A number of experts in real estate analysed the recent developments in Luxembourg's housing market.
According to a report compiled by the "atHome" real estate group, prices for older homes, which have changed owners at least once, have stagnated somewhat in the first quarter of 2022. The price increase currently stands at around 3%, compared to 6% in the previous six months,
Prices in northern and eastern Luxembourg have slowed down the most, although they are still increasing compared to previous years.
Experts predict that Luxembourg could see a yearly increase of between 3 and 5%, as the demand for housing remains high, particularly in comparison to supply. In order to balance the supply issues, developers should look at using more land, states the report.
The construction sector, however, is experiencing ongoing difficulties, dating back to supply chain issues caused by the pandemic, and exacerbated through the Russian invasion of Ukraine. Materials such as steel, cement and wood are continuing to skyrocket in price, with no end in sight to the inflation.
As a result, construction costs have increased by up to 20%.
Read the full report here.
The expert panel added that the majority of people purchasing homes at the moment are investors, primarily those who do not need extensive loans or mortgages.
Housing loans have also become more expensive recently, particularly fixed-rate mortgages, which have climbed to rates of 2.8%. Homeowners taking out 30-year mortgages for a sum of €800,000 will now be paying around €410 more per month.
Variable rates remain 1.4%, meaning a combination of fixed rates and variable rates is recommended for people who are interested in buying a home in the Grand Duchy.
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