The housing market and the construction sector have faced a crisis since interest rates spiked nearly two years ago.
Although the number of property transactions fell by a third in the past year, there is reason for cautious optimism in the sector — as central banks have not raised interest rates lately and are hinting at possible cuts in a few months' time. Prices have adjusted slightly inwards, and the government has announced a series of measures to stimulate demand again.
The crisis in the construction and property sector is 'elastic' in some respects, with a number of companies able to work through their order books in recent months. However, until new requests are received, there is a risk of a gap appearing, fears Jean-Paul Scheuren, president of the Luxembourg Real Estate Chamber (CIL).
Scheuren also thinks that now is a good time to buy, given that prices have adjusted downwards and interest rates have stabilised (and are even falling slightly, in some cases). There have been a few orders for existing properties, he adds.
Fabrice Poncé, representative of the Fedil interim companies, foresees a clear return to positive trends in September of 2024. He stresses that the only thing needed is a little patience and cohesion, as he fears certain professions in civil engineering are only now beginning to feel the effects of the crisis.
How many jobs did the housing crisis cost?
Despite this optimism, the housing crisis has resulted in numerous bankruptcies and job losses which now need to be addressed.
According to Statec, since October 2022, 2,500 jobs have disappeared from the construction sector. Roughly 2,000 of these were interim workers. According to Fabrice Poncé, this trend has decreased by 20 to 25 per cent. He fears that a number of these workers — often older Portuguese workers — will not return to employment when the market picks up again.
Jean-Paul Scheuren also fears the same for employees at real estate agencies, as around 15 per cent of jobs have also been cut in this sector. He notes that, prior to the crisis, 3,000 to 4,000 people were in training to become property agents, while only 200 to 300 are interested now.
Notaries have also been affected by the crisis. Thirty-six notary offices in the country employ around 300 people in total — but there are different specialisations within the sector, explains Martine Schaeffer, president of the Luxembourg Chamber of Notaries. According to her, only two firms had to part ways with two or three employees, but the notaries assume that this is only a transition phase.
