For the first time in many years, prices are falling - A godsend for those who, despite the rise in interest rates, are still able to buy.

Once all-powerful developers and owners are now subject to the law of the real estate market. The market has flipped due to the consecutive increases in interest rates that have severely impacted the purchasing power of potential buyers and, thus, greatly reduced demand.

Yann Gadéa, head of consultants at atHome Finance, already anticipated this last November. "At some point, developers will have to sell off part of their stock". This point seems to be reached. Indeed, the atHome group announced on Tuesday an unprecedented drop in housing prices in the first quarter of 2023.

According to experts, the situation is not about to improve for developers. Proof of it are the calls for help from the construction industry and, most recently, the warning from Inowai's CEO. "There will be a breaking point," he announced in an exclusive interview with RTL last week.

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But then again, one man's poison is another man's meat. Despite a non-negligible loss of purchasing power, buyers now have a unique opportunity "to make good deals" according to Yann Gadéa. He says that Luxembourg "has become a buyer's market" and that "the negotiation potential" has increased significantly.

RTL

Yann Gadéa, responsable des consultants chez atHome Finance / © atHome Finance

The team leader at atHome Finance estimates the trading capacity at "10 or 15%". An approximation that is especially true for the existing market according to him. "In the new market, I don't want to make any wild guesses, but we know that developers are already offering deals," he says.

Current offers range from a free kitchen instead or free parking space to a non-indexed construction price or simply a reduction in the sales price.

"When the rates go down, the prices will go up again", he says. "Demand remains strong" and the housing shortage we've seen so far could likely be exacerbated by the decline in activity on the construction market. A hypothesis recently mentioned by an expert from the Observatoire de l'Habitat and supported by major players in the sector.

The Federation of Craftsmen has already sounded the alarm last December by announcing that a third of the units planned for 2023 would not be built, "due to a lack of investors". In the meantime, many projects are still for sale and "the stock has never been this high" confirmed the CEO of atHome Group at the beginning of the year.

Those who, in spite of the rising interest rates, still hold a certain power of purchase are being alerted. However, they should know that banks in Luxembourg currently offer a fixed rate over 30 years which is between "3.9 and 4%" and a variable rate which can go "from 4.5 to 5%".

So, despite the fall of prices, buying will still not be within everyone's reach.