The vice-president said the situation comes at a tense time for the property market. Off-plan sales (VEFA) are struggling and relations between estate agents and property portals in the Grand Duchy have grown increasingly complicated.
Over the past three years, Luxembourg has been plunged into a state of polycrisis that is now jeopardising the country’s attractiveness and appeal. When insufficient housing is built, too few properties reach the rental market and rents rise sharply and quickly, he explained, calling this a threat to the right to housing.
Scheuren described rent levels as a “disaster for the country’s attractiveness”. Despite mounting pressure, Luxembourg has yet to seriously debate rent caps. Scheuren said the country must decide whether it still wants growth and whether it intends to preserve its social model. Maintaining that model, he argued, requires population growth – and therefore additional housing.
However, new housing remains difficult to sell as interest rates and prices stay high. The proportion of people able to purchase property has fallen considerably in recent years, he acknowledged. Prices remain too high for much of the Luxembourg middle class, while confidence in the market has weakened following a period when projects were launched easily amid historically low interest rates.
While acknowledging that prices remain high, Scheuren noted that land was often purchased at elevated prices and that construction costs have risen sharply. Building today is almost 50% more expensive than before the crisis, he said, helping explain why off-plan properties have become increasingly difficult to sell.
The traditional VEFA model has also come under strain. In the past, up to 80% of units in a development were sold 24–36 months before construction began. Today, developers often have to finance projects themselves before being able to sell properties.
“You have to build in order to sell and you have to sell in order to build. We are faced with this dilemma today”, Scheuren said. He added that progress would require more than political will, pointing in particular to the role of local authorities and delays in building permits.
