Fewer homes to be built in 2023 and 2024 despite shortage

The private sector used to build more than 4,000 housing units per year, but less new-builds has resulted in a housing shortage, putting more strain on the rental market.  The president of the Real Estate Chamber discussed the housing situation in an interview with our colleagues from RTL Radio on Tuesday morning.

According to Scheuren, both financing and construction are affected by the changing real estate environment. In times like these, developers need predictability, "but there is none at the moment." Scheuren believes that this explains why many projects have been put on hold and why developers have been very cautious.

Pressure on the rental market will increase

The fact that Luxembourg is building less is "not good," as the demand for housing remains high. "After all, people need to find a place to live, whether they rent or buy," the president of the Chamber of Real Estate said. For the same reason, however, Scheuren also thinks that property prices won't necessarily fall. One of the main problems, in his eyes, is that there is an absence of affordable rental housing for low-income individuals, "again, because of a lack of construction and investors."

According to Scheuren, it is "difficult" to talk about prices at the moment. Even though there is less demand since fewer people can afford to buy, prices have risen once again in the last quarter of 2022. As the impact of indexation on the sales price is unpredictable and construction costs must be covered, "prices are increased in order to ensure a fixed amount."

Could the public and private sectors work together to fight the housing crisis?

Scheuren declared that now is the time to seek solutions with the state, "in the interest of the housing market but also of the sector." The president of the Real Estate Chamber regrets that developers are no longer involved in the discussion on how to keep the housing market in check.

Regarding the buy-back of housing that developers cannot sell, Scheuren said that selling housing units to the state at a loss is also not an option. He pointed out that the Ministry of Housing had offered to buy back housing units and rent them out at affordable prices but failed to reach an agreement on the price with private developers.

Finally, Scheuren announced that the Real Estate Chamber is working on an application template for sectoral short-time work for estate agents. This application is intended to be used when an economic sector is facing difficulties.