Is it still worth buying property in Luxembourg?

For a long time, property was booming in the Grand Duchy, operating as a source of wealth for a large section of Luxembourgish society. But after several years of rocketing growth, prices have reached unobtainable heights. "Everyone gorged themselves", explained the economist and author of a number of books on housing in Luxembourg, Michel-Edouard Ruben.

But after this "gorging" comes crisis. The explosion in interest rates brought a rapid halt to Luxembourg's housing market, causing the government to intervene with generous measures. However, these were only sufficient to revive the existing property market, while new-builds continue to slump.

A halt to off-plan, or VEFA, construction means very little in terms of new construction. This issue must be rectified if Luxembourg is to retain its attractiveness as a destination for buyers. In addition, interest rates are unlikely to fall below 3% and the ECB is yet to announce any upcoming drops.

This therefore reduces the yield of rental investors in Luxembourg, whose importance was underestimated in 2020. In addition, developers and builders are still facing financial issues in the Grand Duchy.

In the meantime, the Ministry of Housing is seeking a "new model" to get things moving again, but the future remains uncertain. Is it still worth purchasing property in Luxembourg? RTL Infos spoke to three experts on the topic.

'Invest now before the market rises again'

François Xavier Gilen, directeur commercial chez Thomas & Piron Luxembourg / © Thomas & Piron Luxembourg

François-Xavier Gilen, commercial director at  Thomas & Piron in Luxembourg, declared himself an optimist about the medium-term options for buying property, saying he expects a "substantial recovery in the new-build market" despite official figures showing the opposite. The possibility of an increase in prices was also mentioned, echoing housing minister Claude Meisch's comments on the matter.

"Today, the supply of new homes is there, and they're very attractively priced, which creates a unique window of opportunity. Banks are relaxing their financing criteria somewhat and rates have stabilised. We are clearly observing a substantial recovery in the new-build market. If demand continues to grow, prices will automatically rise. So it's the right time to buy, before the market starts to go up again."

"For buyers who are still hesitant, we must encourage them. Investing in new construction means choosing immediate comfort, tangible guarantees, like a ten-year guarantee, completion guarantee and high energy performance, and a property that complies with modern European standards. In a rebalancing market, it is better to move forward with a solid player that is capable of supporting its customers and meeting its deadlines."

'Buying in Luxembourg always makes sense'

Julien Vinti, directeur commercial chez Barnes Luxembourg / © Barnes Luxembourg

Julien Vinti, sales director at Barnes Luxembourg, gave a nuanced and exhaustive response to the question. He said it was important to distinguish between purchasing a main residence or an outright investment. While the latter may lead to difficulties, Vinti emphasised the importance of considering the future, as the era of automatic returns is over.

"Fundamentally the answer is yes, but with important nuance. Luxembourg's housing market has declined sharply over the last three years, with an average correction of 10% to 20% across all segments. This is mainly explained by the sharp rise in interest rates, which automatically reduced part of the borrowing capacity of potential buyers. However, this correction occurred without total collapse, proof of the resilience of the Luxembourg market."

"Despite everything, there are several signals showing a stabilisation from 2024 onwards. Rates dropped, demand is rising again and sellers are finally adjusting prices to reflect the new market. From a structural point of view everything is solid: the housing shortage, sustained population growth, low unemployment rate, the country's attractiveness is stable. Supply is low particularly in areas around the city, which will support prices in the medium and long term."

"When it comes to buying a primary residence, the current conditions represent a real opportunity when considering the vision for the next decade. Particularly for new-builds where developers are offering attractive negotiation options. Although most government measures disappeared after June 2025, they have maintained the €40,000 per person tax credit to encourage first-time buyers and households hoping to secure a property before the end of the current measures."

"From an investor's perspective, the attractiveness is more nuanced. Profitability has been significantly impacted in recent years, particularly by the decline in medium-term capital gains potential. Nevertheless, I remain optimistic given the developments underway in changing neighbourhoods such as Gare, Hollerich, and Cloche d'Or, which still offer great prospects. There are also opportunities for ​​shared accommodation or furnished accommodation in the short and medium term, with demand increasing sharply in recent years."

"We need to think in terms of the internal rate of return, taking into account taxes, charges, vacancies, and potential for medium-term capital gains. Investors can't be satisfied with the annual rent/purchase price ratio, they need to project the numbers over 10 to 15 years, looking at income, expenses, resale and so on. If they cannot control all these elements, most net returns would be negative. In conclusion, buying in Luxembourg still makes sense, but the era of automatic and rapidly acquired capital gains is now over. We need a more rigorous approach supported by experts."

'Always interesting as an owner'

Pierre Clément, fondateur et directeur de l'agence Nexvia / © Nexvia

For Pierre Clément, founder and director of the Nexvia agency, if there is a choice between renting or buying, the answer is clear. He said he favours home ownership, which becomes profitable in the second year of ownership. Like Vinti, he believes the Luxembourg market's solid foundations comprise high demand and a restrained amount of properties.

"Yes, because it means achieving long-term financial independence by gradually becoming the owner of your home. But it's easier to do as a couple, in order to cope or even achieve it in the first place given the financial effort required. Despite the high prices, Luxembourg is one of the countries in the world where buying a primary residence is most profitable and also fast."

"Nexvia's 'Buy vs Rent' tool mathematically demonstrates that it is almost always more interesting to own a home after only two full years in the home. Mainly thanks to the absence of registration fees and the deductibility of loan interest – a Luxembourg exception."

"The market for existing apartments, that of first-time buyers, is also showing the strongest signs of stabilisation and recovery - the investment base therefore seems healthy. Nexvia estimates the recovery to be sustainable thanks to the new price balance found on the existing market coupled with a relatively narrow stock of properties compared to general demand."

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