Luxembourg has been ranked the most expensive country in Europe to buy a new home, with an average price of €8,760 per square metre, according to Deloitte's 2025 Property Index.

The annual survey, which examines housing markets in 28 European countries, highlights that affordability in the Grand Duchy remains under severe strain despite a slight easing of mortgage rates across the continent.

According to the report, high interest rates, soaring rents and a slowdown in new construction have made both households and developers cautious. Yet demand continues to outstrip supply, particularly in economic centres such as Luxembourg City.

While some countries reported average mortgage rates below 3.5% – including Belgium, Spain, and France – Luxembourg retained its position as one of Europe's most expensive housing markets, reflecting limited supply and the city's strong international labour market.

While neighbouring Belgium recorded average prices below €3,500 per square metre, and France remained under €5,000, Luxembourg continues to stand out as an outlier. Germany also reported lower costs in most cities, underlining the pressure on households in the Grand Duchy when compared to its closest neighbours.

The report found that Amsterdam, Athens, and Prague remain Europe’s least affordable capital cities when measured against incomes, but Luxembourg continues to stand out at a national level for its consistently high purchase prices.

Analysts said the imbalance is fuelling growth in the rental sector, though most investors and developers still prefer to build apartments for sale rather than long-term rental stock.