The Competition Authority's recent investigation into the residential property sector has drawn fresh criticism, this time from the Chamber of Skilled Trades and Crafts.

In a recently published position paper and an open letter addressed to Minister of the Economy Franz Fayot, the Chamber expresses its concerns, particularly regarding the comparison of property developers' margins with wages in the construction sector.

According to the Chamber of Skilled Trades and Crafts, the Competition Authority's approach is flawed as it seems to overlook the fundamental differences between the business models of property developers and construction companies.

The Chamber asserts that construction companies do not enjoy the same level of profitability as property developers and cannot benefit to the same extent from rising house prices.

On that basis, the Chamber argues that construction companies have no incentive to hinder housebuilding, contrary to the suspicions raised by the Competition Authority. The surge in house prices, according to the Chamber, is primarily driven by increasing land prices, while construction costs tend to keep pace with inflation.

The Chamber of Skilled Trades and Crafts emphasises the need for a separate analysis of the labour and housing markets. In its position paper, it highlights the distinction between wage-setting governed by labour market rules, with wages fluctuating based on changes in labour productivity, and housing prices governed by the law of supply and demand in the housing market. The Chamber believes that this crucial discrepancy has not been adequately accounted for by the Competition Authority.

Lastly, the Chamber questions the plausibility of 4,000 companies colluding to maintain low wages in Luxembourg and making recruitment less attractive than in neighbouring countries. It suggests that labour shortages may be more attributable to competition from the State.