Julien Licheron, a researcher at the Luxembourg Institute of Socio-Economic Research (LISER), explained experts are currently considering two possible scenarios for how the housing situation will develop this year.
In the first scenario, housing prices will drop and the market will adapt to lower demand. Or, prices will continue to stay high or even rise, as there will be less construction in line with lower demand.
At a conference on Wednesday, researchers discussed the most probable scenario with housing minister Henri Kox, who proposed temporary measures to counter the construction standstill, such as a 12-month reduction of registration fees. However, Kox said he would not be able to meet the construction sector’s demands in terms of lowering VAT to 3%.
Licheron said rent prices in Luxembourg have remained fairly stable in recent years. Since the final quarter of last year, the Housing Observatory has noted a gradual increase in rents. In addition, the share of investors in the new buildings has decreased from 40 to 30%.
On Wednesday, Kox reiterated his intention to push on with his rent reform law, despite heavy criticism. One proposal on the table would see landlords permitted to raise rent by 10% every 2 years.
