The private housing market is not the only market to have suffered in recent months as a number of homes built by the National Affordable Housing Company (SNHBM) are still left unsold after months on the market.

It's not just private housing developers that were holding their breaths for the government to step in. Public developers, too, were waiting for a lifeline from the government, which has been issued with the adoption of the new housing package by the Chamber of Deputies this week.

This is good news for the SNHBM who found themselves in a rather uncomfortable situation for the past months. The director, Guy Entringer, explained that the company is currently building all over the country, bearing the costs upfront, even though sales have been as dry as the desert.

32. Les logements abordables ne se vendent plus

Entringer explains that sales have been at a standstill not solely due to high interest rates. Effectively, the explosive increase in construction prices have also hiked up prices for affordable housing. This has caused a chain reaction, which first impacted low-income households and then creditworthy households as well.

"This is why the SNHBM is seeking to expand the criteria that grants people access to affordable housing," explains Mr. Entringer. "It's important for SNHBM to sell homes," he adds, referring to the budget hole resulting from the decline in sales.

According to Jacques Vandivinit, director of the Housing Fund, a problem that should be resolved with the passing of the housing recovery package is that it will lead to an increase in income ceilings for the purchase of affordable housing. He emphasised that "allowing more people to access assistance is very important."

"We cannot continue this way. It was already virtually impossible to purchase anything on your own before the rise interest rates", he recalled. He welcomes the housing recovery measures. However, he believes that the government can do more when it comes to the rental market.

For the Housing Fund director, if the government wants to avoid another hike in housing prices, the solution is clear: To maximise the development of affordable real estate in Luxembourg, investments are needed, as well as a streamlining of the regulations governing construction in the Grand Duchy. And then, everyone needs to follow along.

Road blocks in municipalities?

When asked on the subject, Guy Entringer and Jacques Vandivinit cofirmed that certain municipalities do not want affordable housing in their neighbourhoods. "Certainly, there are municipalities that are more proactive than others," the SNHBM director declared while choosing his words carefully.

Jacques Vandivinit believes that this is due to the stigma surrounding affordable housing. "An irrational fear," according to Vandivinit. He agrees with Entringer that generally the integration process of affordable housing runs quite smoothly.

The Housing Fund director hopes that given the current circumstances, all municipalities in Luxembourg will show solidarity in order to counterbalance the trends in the private housing market. Alas, this is not always that simple, according to Vandivinit.

Addressing other difficulties in the affordable housing sector,  Guy Entringer explains that the SNHBM sometimes receives a lower housing density allowance for its projects, while the private sector is permitted to build larger and taller in the same neighbourhood. He also points out that "the denser the project, the cheaper it is."

Concretely, this means that as public developers need to construct houses more densely, affordable housing prices could decrease even further.

This and plenty of other fascinating issues are addressed in this week's episode of RTL Infos' Gaël Arellano 'La Bulle Immo' on RTL Play (in French). Tune in for discussions around the advantages of leaseholds, upcoming large affordable housing projects, and the issue of labour force in Luxembourg.

The podcast is also available on Apple Podcast and Spotify for your listening pleasure.