While the market for existing properties is currently breaking sales records, the new-build market is stagnant. “The last trimester [of 2025] will be catastrophic”, declared Steve Vermeer, spokesperson for promoters at the Chamber of Real Estate, in the latest episode of the ‘La Bulle Immo’ podcast on RTL Infos. He estimates the number of successful sales will reach 1,200 this year, with the majority going to the Luxembourg government, talking of an annual deficit of “close to 3,000 homes”.
This estimation is based on the construction figures prior to the crisis (between 3,000 and 4,000). According to official estimations released by the National Institute of Statistics and Economic Studies (STATEC), Luxembourg needs to build at least 6,000 properties per year to meet demands in line with population growth – is currently falling far short of that target.
And the situation is far from resolving itself, according to David Syenave, partner at EY Luxembourg. “There is no sign indicating an end to the crisis”, he declared. “It has been going on for about four years.”
The country must construct homes if it wants to continue its development, as the lack of housing, soaring rents, and housing prices have become a hindrance to the Luxembourg economy. The Grand Duchy’s big employers are struggling to recruit and hold on to their talents. “People can’t find housing, so they rent, they stay two or three years and then they leave the country. They develop their careers in Luxembourg, but they don’t stay long-term. It is the big issue for the ‘Big Four’”, Syenave said.
As a result, some companies are planning to expand in other countries instead of Luxembourg, which inevitably means less tax revenue for the country. The EY representative applied the same logic to the issue of housing. “We are reticent when it comes to reducing VAT, but when zero apartments are being sold at 17%, that’s zero revenue for the State coffers”, he said. “In contrast, if one sells 100 or 500 properties at 6% VAT, that’s a success for everyone.”
This forms one of Syenave’s proposals: copying our Belgian neighbours in reducing VAT for demolition-construction to 6%, a measure the Belgian government introduced in the pandemic.
“Measures must be put in place from early 2026", insisted Syenave. Vermeer agreed, pointing out that developers are not the only parties suffering from the situation. Nearly 5,000 employees are estimated to have left the country in 2023 alone, in a blow to a workforce considered crucial to the development of housing stock in a country that has no choice but to grow, if only to guarantee the sustainability of its pension system.
The status quo in the off-plan (VEFA) market is also not beneficial to the government. Vermeer estimated that the tax loss linked to the loss of sales could reach €1.2 billion, without including the loss of tax revenue on developers’ profits, the registration of the land share, and on payroll, which ultimately translates into increased unemployment.
For the full discussion, listen to the podcast (in French) on Spotify, Apple Podcast or RTL Play.
