Property prices in Luxembourg have stabilised, with slight declines in some segments, but new-builds remain in difficulty as the expiry of the housing package deal and weak construction activity add pressure to an already strained market.

As the third quarter of 2025 closes, the state of the property market is mixed. Prices, which had been rising for some time, stabilised between July and September and even dropped in some categories since the first quarter: down by 1% for existing houses and 1.7% for new-build apartments. These figures are based on averages calculated by real estate portal atHome at the beginning of October.

Analysts at the Cloche d’Or-based group describe this as "a transition stage", but the question is: towards what? For new builds, difficulties persist. As housing market expert Julien Licheron of the Habitat Observatory notes, off-plan sales (VEFA) remain at just half their pre-crisis level. Meanwhile, the shortage of housing in Luxembourg continues to worsen, a concern also raised by construction industry representatives.

The end of the housing package

The housing support package, introduced last year and extended until summer 2025, helped to partially revitalise the Luxembourg property market. However, this renewed activity was seen almost exclusively in the resale market, where volumes returned to near pre-crisis levels. While this was welcome news for buyers and sellers of existing properties, these transactions did not contribute to increasing the housing stock, which represents a major problem for Luxembourg.

With around 10,000 new arrivals each year, the country urgently needs more housing construction, yet has fallen far short. Very few new builds have been completed in the past two years, further straining a market already under pressure for more than a decade. The expiration of the housing package is expected to weigh even more heavily on off-plan sales.

The package's tax incentives were designed to draw investors back into the market but failed to attract the big players in rental investment. Meanwhile, the government stepped in to purchase development projects, yet without significantly increasing the annual supply of affordable housing. Without new construction, pressure on the private housing market will only grow.

Housing support schemes are not a cure-all either. Over the past 18 months they appear to have contributed to a "mechanical rise" (for editor: or "automatic rise"?) in new-build prices. This suggests Luxembourg can no longer rely on past mechanisms such as accelerated depreciation to offset low construction levels. Stakeholders are now searching for "new solutions". Among the proposals, the Chamber of Skilled Trades has called for the introduction of zero-interest loans for first-time buyers.