Following a rather disastrous 2023, players in the Luxembourg real estate market are hoping for a recovery in the first months of the new year. But will this recovery actually materialise? Many uncertainties remain, our colleagues at RTL Infos write.

It was a real shocker: In 2023, housing prices fell for the first time in almost 15 years. Twelve months later, the real estate market has changed profoundly. While not so long ago buyers were snapping up off-plan projects (VEFAs), existing properties are now taking precedence.

Those who could afford buying a home, despite the rise in interest rates, were lucky. Meanwhile, construction companies have seen their activity fall to unprecedented levels. Some companies have also gone out of business.

In a recent debate organised by atHome, Statec economist Ferdy Adam confirmed that 1,400 jobs had been lost "mainly in construction" in 2023. According to him, half of the people concerned are currently unemployed. "The others are undoubtedly cross-border workers or expatriates who have returned to their country," he said.

Arnaut Regout, managing director at BPI Real Estate, announced that we should expect "a fairly calm first half" of 2024, adding: "In the second part (of the year), we will be able to start a recovery and we hope to have something more stable in 2025".

For his part, the Statec economist preferred to speak of a "year of transition" which will then be followed by "a real recovery" in 2025. Razvan Mara, partner in the audit department of the 'Real Estate' team at EY, said it is now up to the government to address questions of taxation and urban planning before we can talk about recovery.

Prime Minister Luc Frieden's new government has promised measures to stimulate the housing market, which will most likely include tax incentives.

The good news is that after months of stagnation, interest rates began to fall significantly at the end of December 2023, a trend that continued into the new year and would increase the borrowing capacity of potential buyers. This would be good timing, given that prices are still falling throughout the Grand Duchy.

Arnaut Regout is counting on this to relaunch activity in the first half of 2024, alongside the government's measures to boost the real estate market. But once demand returns, prices will likely start to rise again. As Minister for Housing and Spatial Planning Claude Meisch emphasised, "the housing problem cannot be solved overnight".