Luxembourg's housing market on the mend due to government-instated measures

The housing market is picking up again. Purchasing power is increasing due to indexations, real estate prices have gone down as well as interest rates.

Jean-Paul Scheuren, the spokesman for “Chambre immobilière”, an organisation which represents brokers, trustees and developers in Luxembourg, confirmed the latter:

“We have actually realised that, concerning already existing properties on the market, their sales numbers have returned to the same level as before the crisis. However, for all newly-built properties or properties under construction (VEFA), the numbers are still way below our expectations. The measures taken by the government are starting to find ground though, so we have been seeing people returning to the property market during the last couple of months. We have even received requests to sign the first contracts.”

“Chambre immobilière” hopes for a prolongation of government measures

At the moment, a lot of people are keen to profit from the government-instated support for example the doubled tax reduction when signing with a solicitor, or the halved capital gain on properties. These conditions will expire by the end of this month.

Jean-Paul Scheuren hopes that the government is going to rethink their choice, and continue with these measures which help the property market to be nursed back to health.

“We would be happy if the measures could be prolonged, because it is only now beginning to attract buyers. We are afraid of losing momentum if these practices will not be continued. However, it’s up to politicians to decide upon.”

Luxembourg Bankers’ Association (ABBL) confirms the recovery

The Luxembourg Bankers’ Association argue that the changed dynamics in distributing loans is noticeable, a certain confidence has returned.

“Our members tell us that we have more files. Not only for the residential sectors but also for VEFAs, and sales in future state of completion”, adds ABBL manager Jerry Grbic.

When it comes to loans, there is a decrease in refusals and admissions are steadily rising. It is still too early to summarise the recent developments in numbers, yet “there are individual statistics from our members, which have been tracking progress and growth for four to six months now. We are talking about increases of over 50% in comparison to last year’s situation. It is a substantial progress, not merely individual cases”, Jerry Grbic enthusiastically explains.

There are multiple reasons which led to the current developments, namely increased purchasing power due to indexation, real estate prices have decreased just as the interest rates have too.

The ABBL executive elaborates further: “Nowadays you see rates when they are fixed - one needs to revisit them after five to ten years - those fixed rates might have gone up to 3.20 or 3.30. Then the floating rate will also increase, based on the primary interest rate imposed by the European Central Bank, which could range from 4.25 to 4.50.”

Jerry Grbic emphasises that the political support measures definitely helped the property market. He adds:
“We can see that the whole package is positive and that it helps to get the market back up. It is worth discussing whether we should keep the current conditions for another six months or not.”

Our colleagues from RTL.lu confirm that solicitors are quite busy as the year is coming to an end. Unfortunately, the president of the “Chambre des Notaires” was not available for an interview.