House prices 'still need to come down', says minister

The government council is due to pass a bill concerning taxes on empty plots of land and homes before parliament's summer break, Meisch confirmed. As new construction has not fully recovered from the housing crisis*, the minister once again appealed to developers and banks to step up their efforts in encouraging new builds. He added that municipalities should also shoulder some responsibility.

(*) The figures supplied by the housing registry in May show there were more notary deeds signed for apartments under construction in the first 4 months of 2025, compared to the last two years. However, this number is still half as many as the years prior to the crisis in 2020, 2021 and 2022.

In Luxembourg, housing supply has failed to keep up with demand, exacerbated by the difficulties of the past three years in which there has been significantly less construction. Meisch said a balance was needed between prices and financing options. However, he said both private buyers and developers were still having issues. Even if interest rates were to be lowered further, he said house prices still need to come down.

A new model for new-builds

Meisch went on to question the usual model for new-builds in Luxembourg, which stipulates that 80% of apartment dwellings in a project must be sold on plan before a bank will confirm credit. He said he was concerned because banks were becoming "reticent" in terms of lending money, although he later acknowledged this was due to banking rules and the need to consider risks.

The minister said he views the State, which has been purchasing dwellings on plan since the beginning of the crisis, as a new model. When asked if state intervention also risks preventing prices from falling, Meisch replied that the government was setting itself thresholds. Anyone asking for "disproportionate" prices need not even bother, he said.

There is a pressing need to build more, build faster, and in the right areas, Meisch stated, pointing to the CSV-DP government's measures to simplify procedures as a means of encouraging this. The measures have already been implemented in some cases. The "ministerial remembrance" project, for example, has been submitted to the relevant parliamentary committee for review, and other measures such as land tax reform and taxes on empty plots and dwellings will be passed by the government council before the summer break. However the minister acknowledged the "technically complex" nature of these amendments and said the government parties were working on clarifying several political issues.

No comment on the capital's general development plan (PAG)

As for the municipalities, Meisch said he had met with 50 out of 100 councils to develop joint projects or to discuss building standards and potential amendments. He mentioned the amendments to Article 29bis of the housing pact, which aims to encourage the construction of more affordable housing for projects, and said affordable homes need to be removed from the calculation because builders would otherwise have to pass on their losses to other homes in the same development.

The municipalities play an important role in the "puzzle", Meisch said. Luxembourg City council is the second-largest landowner for construction in the country, and yet the number of available homes is still far below that of the number of jobs in the Grand Duchy.
 
Is there a need to rework mayor Lydie Polfer's general development plan for the capital? Meisch chose to answer carefully: "I don't live in the city, I don't vote in the city, I don't practise city politics – I don't feel qualified to comment on the building plan. However, I do believe that municipalities have a responsibility to ensure there are plenty of homes available."

Pensions: "No outsider is coming to solve our problems"

Although Meisch said he was unsure if Prime Minister Luc Frieden's announcement on pension reforms had been delivered at the correct moment and in the right way, he went on to defend his coalition partners, saying Frieden had highlighted an important issue and made it clear no one was coming to solve the issues from outside. However, Meisch added that the trade unions and employers were still due to be consulted further on the matter.

Reading between the lines, it is apparent that Meisch shares Frieden's preferences when discussing the three main options to re-balance Luxembourg's pensions system. When faced with the option of cutting output, Meisch used the term "dramatic", and again for the option of raising contributions. However, when discussing the option of raising the retirement age – Frieden's preferred option – Meisch declined to use any adjectives.

When asked about his negative results in the most recent Ilres survey, and his relatively low popularity since becoming a minister in 2013, Meisch reacted with laughter. He said he was satisfied with his election results and had received increasing amounts of responsibility with every new government. However, he said surveys should be taken seriously and the electorate needed to feel as though politicians were listening and reacting.