The Housing Observatory has warned that activity on Luxembourg’s property market has declined in the third quarter of 2025, immediately after the tax measures expired. Prices fell by 3.1% over the quarter, affecting houses, flats and new-build properties sold off-plan alike. According to the developers’ spokesperson at the Chamber of Real Estate, the situation has not improved in the fourth quarter.
It should be noted that the Housing Observatory reflects developments with a delay of around one quarter, as its analysis is based on recorded land registry data.
As 2026 approaches, some media outlets are reporting rising prices, which is only partly true. Prices did increase over the course of a year, between the third quarter of 2024 and the third quarter of 2025. However, it is highly likely that the downward trend which began between the second and third quarters of 2025 will intensify towards the end of the year. There are several reasons for this: interest rates have remained unchanged, government support measures have expired, and the final months of the year are traditionally a slow period for property transactions.
Another, lesser-known factor in Luxembourg is what some describe as “panic selling”. After two years of falling prices between 2021 and 2023, some owners have accepted that they may no longer achieve the prices they expected five years ago. With prices trending downwards again in the second half of 2025, some may choose to sell now at a lower price rather than risk an even greater loss later.
The Luxembourgish property market has rarely experienced such a prolonged period of uncertainty. While there are no signs of a collapse for the time being, the outlook for off-plan sales is particularly worrying. Very few homes have been built since the end of 2022, and this situation is unlikely to improve in the near future. Investors remain largely absent, with the public sector appearing to be the only major buyer still active on the market.
This may be positive for the development of affordable housing, but the overall volume of sales remains far too low to meet demand. The Luxembourgish government’s statistics service STATEC estimates that at least 6,000 new homes would need to be built each year to balance the market. According to available information, Luxembourg has seen only a few hundred new homes built per year since the crisis at the end of 2022. In 2025, around 1,200 off-plan sales were concluded, according to Steve Vermeer, spokesperson for promoters at the Chamber of Real Estate. This is three times fewer than before the crisis, and most of these homes will not be completed before 2028, he added.
The imbalance is therefore set to persist, raising bigger questions. Is Luxembourg still attracting the same number of foreign workers? Have housing and mobility challenges begun to outweigh the country’s economic appeal? And have safety concerns in areas such as the Luxembourg City’s Gare district damaged the Grand Duchy’s image? Notably, this last issue was one of the two main concerns raised by expats in the latest Politmonitor survey.
