A market that failed customers: housing prices in Luxembourg have tripled in 15 years
It's not a secret for residents and the government, that the rental market in Luxembourg is experiencing a crisis. With apartments becoming increasingly inaccessible to a larger number of residents, the rising prices of real estate and interest rates are making it more and more difficult for people to access the property market.
Despite a significant decline in the growth of value in 2022, the price of housing in the country, and especially in the capital, is still exorbitant. It is becoming clear that the issue of real estate and its scarcity will remain a priority for Luxembourgers, at least if they want to stay and live in the country. This problem is particularly serious in the run-up to the election. The candidates will have to work very hard to reassure the public, or at least offer a credible plan of action to resolve the situation.
The prices of apartments and houses have risen three times in the last 15 years on average. In the canton of Luxembourg, the average price of an apartment is almost 1,600,000 euros.
But due to a combination of factors, such as the rising prices of real estate, soaring interest rates, and the limited supply of available housing, landlords are profiting nowadays, because renting is becoming the only viable option for many people. The Housing Observatory has observed a significant increase in rents at the national level, particularly in recent months: there is no opacity of the negotiation margins between the landlord and tenant, and prices can vary, depending on the canton, tenants work contract (sometimes it is requested in order to even get a viewing of a place), and the wish of the owner.
In Luxembourg City, the cost of rents has seen discontinuous growth, with inflation peaks of over 17% compared to the previous year in 2018 or 2020. Renting an average property in the capital now costs almost €40 per square meter, representing a 107% increase over the past 10 years.
Prestigious districts such as Belair, Limpertsberg, and Ville-Haute are more expensive than districts like Bonnevoie or even the Gare station district. Additionally, the smaller the leased area, the more the price per square meter tends to increase, allowing property owners to make a profit on their investment. In Bonnevoie, for example, the average advertised price of rent per square meter is almost €47, which is the highest in the city. However, a closer look at the numbers revealed that the average surface area of properties rented out in Bonnevoie was the lowest, at just 23.9 square meters, mostly comprising studios.
The housing crisis in Luxembourg has made even renting apartments increasingly inaccessible to many residents. The upcoming elections could provide an opportunity for policymakers to address this issue.
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