Luxembourg house prices up slightly for first time in two years

After experiencing a significant decline from 2022 to 2024, Luxembourg’s real estate market has been showing signs of recovery, marked by increased sales activity and a modest rise in housing prices for the first time in two years.

A 1.4% annual increase in overall housing prices was registered at the end of last year, albeit with variations across different types of properties, according to the latest Logement en chiffres report published by the Housing Ministry, in collaboration with Statec, on Tuesday.

Existing apartments saw a 1.8% rise in prices over the year, while the value of existing houses rose 3% in the same period.

However, in contrast, apartments under construction continued to see prices drop, falling 2.4% compared to the last quarter of 2023.

The downturn in the housing market from 2022 to 2024 was largely driven by central bank interest rate hikes aimed at controlling inflation. During this period, housing prices dropped between 16.6% and 19.3% across various regions, with Luxembourg City experiencing a 15% decline, Statec said in a press release accompanying Tuesday’s report.

Overall, housing prices fell by an average of 16.3% between the third quarter of 2022 and the first quarter of 2024, before stabilising in mid-2024.

Existing houses were hit hardest, with a 21.5% price drop over the almost two-year period, while existing apartments saw a 15.9% decline in prices.

By late 2024, the most remarkable rebound was observed in sales of apartments under construction, which surged by 272.6% year-over-year.

Transaction volumes also increased for various types of properties, with apartment sales rising by 108.2% compared to the same period in 2023, and existing house transactions climbing by 77.2%.

Rising rents

While home sales and prices are showing signs of recovery, rents are also continuing to rise, according to the report.

In the final quarter of last year, advertised rent prices increased by 2.6% year-on-year, surpassing the overall consumer inflation rate of 0.8% during the same period. Compared to the previous quarter, rents rose by 0.8%.