Inflation directly affects the pricing in the real estate sector. And, bizarrely, it's not always for the worse. In 2020, house prices rose by 15% with 2,5% inflation, which resulted in only 12.5% real growth. And in 2022 prices increased by 11.1%. However, with inflation at 6.7%, the real hike was much smaller at just 4.4%.
The housing under construction is the one market that's most susceptible to growth. Compared to the 3rd quarter of 2021, the price increases on it are at 18.3%. And the number of transactions has decreased by a whopping 36% compared to that same last year's 3rd quarter.
The number of contracts successfully signed in other categories has also dropped sharply: ready-made apartments lost 10% of sales, houses are bought 13% less, and building lots are sold an entire 25% less often. At the same time, prices for these types of real estate are rising. Slower than the price of a new building, of course, but they also continue to grow.
It is too early to talk about the crisis in the real estate market, yet the statistics speak for themselves. The decrease in the number of transactions shows that, despite the high demand, fewer and fewer people can actually afford to buy housing in Luxembourg.