Credit: Housing Observatory / STATEC

On Wednesday 28 March 2024, the Housing Observatory and STATEC jointly released their latest "Housing in Figures" publication dedicated to the residential real estate market.

As noted by Luxembourg's Ministry of Housing and Spatial Planning, the new publication indicates limited activity in the real estate and land markets and a slowdown in the decline in sales prices.

According to the publication, housing prices (apartments and houses combined) decreased for the fifth consecutive quarter; these dropped by 14.4% between the last quarter of 2022 and the last quarter of 2023. The price of existing apartments fell by 14.5%, whilst that of new apartments / apartments under construction were down 7.6% over one year. The number of sales dropped by 28.6% for existing apartments and by 72.8% for new apartments / apartments under construction. The price of existing houses similarly dropped by 18.8% during the period in question.

The Housing Observatory and STATEC noted that the drop observed in the last quarter of 2023 was less significant than in previous quarters. The general index fell by 2.1% compared to the third quarter of 2023 and returned to levels seen at the end of 2020.

The prices of apartments under construction were almost stable compared to the third quarter of 2023 (-0.2%), while those of existing apartments fell by 3.9% over one quarter. After a decrease of 8.6% in the third quarter, the drop in the prices of existing homes was limited to 1.7% in the last quarter of 2023.

These price changes relate to notarial deeds registered in the last quarter of 2023, i.e. to sales agreements mostly signed before the end of October 2023.

Throughout 2023 as a whole, housing prices fell by 9.1%, after an increase of 9.6% in 2022. The general index thus returned to 2021 levels. Apartments under construction witnessed a decline of 3.5% over the entire year, whilst this amounted to a drop of 13.8% for existing houses in 2023.

Commenting on the publication, the ministry added that this drop in sales prices should be interpreted in parallel with the drop in activity on the real estate and land markets. In the apartments under construction segment, certain developers appear to have chosen to lower prices (or were forced to do so) in the third and fourth quarters of 2023. However, the number of sales in this segment fell sharply throughout 2023, registering only 106 sales in the last quarter of 2023 (-72.8% compared to Q4 2022).

The publication also details a new indicator (developed by the Housing Observatory) of announced rents for furnished rooms. The goal is to better monitor this segment which has experienced "significant" development in Luxembourg in recent years. In 2023, the number of advertisements for the rental of furnished rooms represented approximately 13.5% of the total rental offer. The publication authors added that this increase (since 2013) may also be linked to greater use of real estate portals.

The offer remains "very concentrated" in two geographical areas: Luxembourg City (60% of announcements / supply in 2023) and the south of the country (canton of Esch-sur-Alzette; 35%).

The indicator of announced rents for furnished rooms increased by 5% per year on average between 2010 and 2023 (i.e. a cumulative total of +89.6%), compared to 4.1% for advertised rents for traditional apartments and 3.2% for advertised rents for houses. In 2023 alone, however, announced rents increased even more sharply: +6.4% for announced rents for traditional apartments between 2022 and 2023, +5.7% for those of houses and +7.4% for announced rents for furnished rooms.

Just as location is considered a key component in forming apartment sales prices, it was found to be a determining factor in explaining apartment rents. The publication also showed that around a third of households surveyed by STATEC had signed their lease contract less than two years ago, and that their rent was on average 16% higher compared to leases signed more than two years ago. The Housing Ministry noted on this point that rents are rarely changed during the lease period.

After several quarters of sharp increases, the announced rents of apartments (from real estate advertisements recorded by the Housing Observatory and transmitted by stabilised in the second and third quarters of 2023. However, a new increase was noted this quarter: +3.9% over one quarter and +3.9% between the last quarter of 2022 and the last quarter of 2023. The increase in announced rents over twelve months was thus higher than that of consumer prices measured by the National Consumer Price Index (+3.2%) over the same period.

The Housing Ministry stressed, however, that these are the rents requested by lessors for new rental contracts. The increase in rents during the lease was more moderate and "significantly" lower than inflation on consumer goods according to STATEC statistics: +1.5% for the rent index between the last quarter of 2022 and the last quarter of 2023.

The Housing Observatory / STATEC statistics have also been updated on the, and websites.