In an effort to prevent a construction downturn and potential job losses, the government has announced it will purchase two private property projects, comprising approximately 90 residential units. It has also confirmed that no incentives will be provided for private investment.
Housing Minister, Henri Kox, disclosed in an RTL Télé interview on Thursday that the state has reached an agreement with developers for two ongoing projects in Luxembourg City and the southern region of the country. The contracts for these "sales in future state of completion," referring to off-plan or under-construction flats, are yet to be finalized, with the state pledging €55 million to the acquisitions.
Kox emphasized that no capital gains would be paid while assuring that developers would not incur losses. However, he mentioned that the purchase price would be below the market value. According to Kox, experts from the Ministries of Housing and Finance have analysed land price trends to determine the acceptable increase in value using public funds. Kox underscored the importance of ensuring that companies do not suffer losses while setting fair and affordable prices for potential buyers.
The State is already considering the acquisition of six additional projects, also consisting of around 90 units, with a similar €55 million allocation proposed. However, the developers' agreement is still pending.
As RTL reported on Thursday morning, there's an increasing number of ready-to-occupy homes for sale, but not enough buyers who can afford them. The Housing Minister has suggested that these properties could also be sold to the state. However, the homes would need to meet the criteria and affordability guidelines outlined by the Ministry of Housing.
Meanwhile, the Chamber of Real Estate criticized that the State's projects are merely a drop in the ocean and suggested it would be more beneficial for an investor to purchase 1,500 to 2,000 units. In response, Kox stated that his ministry is currently developing a "comprehensive plan," and that public investment is at a record high.
According to Kox, construction has seen a 5% increase in affordable housing, surpassing the 2% population growth. Kox also pointed out the renovation strategy as a positive factor for businesses. Moreover, he emphasized the significance of individual support and access to homeownership, expressing hope for quick feedback from the Council of State on this topic.
Aligning with Finance Minister Yuriko Backes, Kox reiterated that there will be no incentives to boost private investment, citing their limited impact on lowering housing prices in the past.
Full report by RTL Télé (in Luxembourgish):
