The real estate market is currently stagnating, meaning there are few houses and apartments being sold. Due to supply issues in the construction sector, there are also few new projects being developed at the moment.
Nevertheless, Luxembourg’s Real Estate Chamber refuses to label the situation a crisis. According to their estimation, prices will not decrease significantly in the coming months. On the contrary, the fault is to be found in the lack of apartments.
The market is suffering from the current economic situation. The supply issues render cost estimations of new projects difficult, which leads to consequences.
Jean-Paul Scheuren, president of the Real Estate Chamber, commented: “We find that the general situation has caused many development projects to be pushed back. We estimate that we will construct about 1,000 fewer apartments this year than in previous years. This naturally raises pressure on the housing and renting market.”
According to Scheuren, the country needs 1,000 to 2,000 more new apartments than are currently being developed. Demand remains elevated and the offer is no longer able to follow. The raise in loan rates is further complicating the situation and fewer people can afford to buy.
This in return will affect the renting market, noted Scheuren: “It is the case that more and more people have to rent because they are no longer able to buy. We therefore need to find new forms of housing, new ways of financing, either through social housing, to be opened for the private sector, so that more can be constructed or that we can find new possibilities allowing people to invest, most notably via blockchain and security tokens.”
The so-called blockchain tokens would allow people to invest small sums into buildings. The stagnation in the sale of real estate will mostly affect smaller developers and agencies, as commissions are poised to go down, concluded Scheuren.
