© Domingos Oliveira/ RTL Luxembourg
Housing prices in Luxembourg, including both apartments and houses, saw an increase in the fourth quarter of 2024, marking the first rise since the end of 2022.
The surge was nearly inevitable given the sustained high demand for housing, with the Ministry of Housing confirming the trend in a press release on Wednesday morning.
The housing market had been impacted by a significant rise in interest rates in 2022 and 2023. However, activity began to pick up again, particularly in the existing housing market, thanks to government measures aimed at stabilising the sector.
The reduction in credit costs also played a role, with activity levels in the fourth quarter returning to pre-crisis standards for houses and even exceeding them for apartments. The Housing Observatory reported an increase in the number of transactions of 108.2% for apartments and 77.2% for houses compared to the fourth quarter of 2023.
While these figures reflect a positive trend for existing properties, caution is advised in interpreting the overall market. The VEFA (off-plan housing) market remains challenging, with the price of new apartments falling by 2.4% over the 12-month period to the fourth quarter of 2024. Tom Wirion, General Director of the Chamber of Trades, had previously raised concerns about this issue.
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The rise in housing prices is primarily driven by existing properties. House prices increased by 3%, and apartment prices rose by 1.8%, following two years of decline. According to STATEC, prices had dropped "on average by 16.3% between the third quarter of 2022 and the first quarter of 2024," bringing them back to levels seen in the fourth quarter of 2020. Following this period of stabilisation, prices began to rise again towards the end of 2024.
Rents continue to climb
With the supply of housing remaining limited, rents have also continued to rise in 2024. Data shared by Immotop with the Ministry of Housing shows a 2.6% increase in rents between the fourth quarter of 2023 and the fourth quarter of 2024. This increase was notably higher than the rise in consumer prices during the same period, according to the Housing Observatory.
The report highlights that these figures reflect rents for new rental contracts. For ongoing leases, the increase in rents was "relatively moderate" at 1.7%. Mieterschutz, a tenants' rights organisation, recently reported a sharp rise in the number of lease terminations in Luxembourg, a trend that could indicate growing financial pressures for tenants.
